Key facts
- ECB policymaker Primoz Dolenc said interest rates may need to rise further due to upside inflation risks.
- Dolenc cited persistent elevated inflation, ongoing conflicts, and potential energy price surges as reasons for potential further tightening.
- Core inflation has remained relatively stable, suggesting contained broader inflationary pressures.
- Risks to the inflation outlook are skewed towards higher price readings.
- Monetary policy is transmitted efficiently across the euro area, with no destructive effect of rising yields observed.
European Central Bank policymaker Primoz Dolenc indicated that interest rates might need to increase further due to upside risks to inflation. He stated that any decision on the timing and magnitude of future rate hikes would be made on a meeting-by-meeting basis, depending on incoming economic data.
Dolenc cited persistent elevated inflation, the lack of resolution in ongoing conflicts in the Middle East and Ukraine, and potential energy price surges as factors supporting a move towards more restrictive monetary policy. He noted that while headline inflation rose to 3.8% in September, above projections and largely reflecting energy prices, core inflation has remained relatively stable, suggesting limited pass-through to underlying components, particularly services.