ECB Policymaker Gabriel Makhlouf Warns of Further Rate Hikes

European Central Bank (ECB) policymaker Gabriel Makhlouf has emphasized the need for the bank to be prepared to raise interest rates further if inflation starts moving in the wrong direction. Speaking ahead of next week's ECB governing council meeting, Makhlouf expressed his unease that eurozone inflation is hovering above 3% despite stronger-than-expected economic growth.

In August, annual inflation in the 21-country bloc accelerated to 3.3%, driven by a 14% increase in energy prices due to disruptions from the Iran war and global energy supplies. Despite this, GDP numbers for Germany's second quarter have been revised upwards, and most sentiment indicators remain optimistic.

Makhlouf expects the ECB to maintain its growth forecast for the eurozone this year, which was trimmed by 0.1 percentage points to 0.8% in June but has since outperformed expectations. He noted that even at a 2.5% benchmark deposit rate, policy is not restrictive and will only start to slow down economic activity once above 2.75%.