ECB Policymaker Warns of Further Rate Hikes Amid Inflation Concerns

The European Central Bank (ECB) may need to raise interest rates further to curb inflation, according to ECB policymaker Martins Kazaks. The ECB has already raised its key rate twice this year, most recently on Thursday to 2.5% from 2.25%, warning that price pressures from the Iran conflict could be long-lasting.

Kazaks, Latvia's central bank governor, sees scope for more interest rate hikes as energy prices and broader inflation remain elevated. He suggests that the current rate of 2.5% is not a ceiling, but rather a point at which rates may need to enter restrictive territory.

The euro zone inflation rate stood at 3.3% in August, with the ECB expecting it to rise further in coming months. Kazaks would not be drawn on whether another hike might come as soon as October, but noted that the ECB can afford to move 'stepwise' without rushing.