ECB Policymaker Warns of Further Interest Rate Hikes
Primoz Dolenc stated the European Central Bank may continue raising interest rates to combat inflation risks driven by global conflicts and energy concerns.
European Central Bank policymaker and Slovenia's central bank chief Primoz Dolenc stated that the ECB may need to continue raising interest rates to address significant upside inflation risks. While the ECB has already increased its deposit rate twice this year to 2.5%, Dolenc noted that the timing and magnitude of future hikes will be determined on a meeting-by-meeting basis based on incoming data.
Dolenc identified several primary drivers of inflationary pressure, including unresolved conflicts in Ukraine and the Middle East, low natural gas storage levels entering winter, and rising food prices caused by El Niño and droughts. He argued that these factors support the case for moving policy rates toward more restrictive territory.
Despite these risks, Dolenc expressed reassurance that core inflation has remained relatively stable, which suggests limited pass-through of energy costs to services and other underlying components. He further dismissed concerns that rising yields are damaging the economy, asserting that monetary policy is being transmitted homogeneously across the euro area.
