ECB Policymaker Warns Interest Rates May Need to Rise Again

European Central Bank policymaker Gabriel Makhlouf has cautioned that interest rates may need to be raised again if energy prices continue to feed through to other areas and cause second-round inflation effects. Speaking on national broadcaster RTE, Makhlouf noted that while inflation is currently above the ECB's target, there are no signs of these effects yet.

Although high energy prices have driven up overall inflation, they have not yet led to increased costs in other sectors, such as food or housing, which would be a sign of second-round effects. Makhlouf emphasized that if this scenario were to change and energy prices remained high, the ECB would need to take action again to meet its target.

Makhlouf had previously warned about the risks of raising interest rates too much, saying it could damage economic growth. He noted that the ECB's two interest rate hikes this year have already had an impact on the economy, and further increases could exacerbate the situation.