ECB Policymakers Warn of Growing Inflation Risks

ECB policymakers have sounded a warning about growing inflation risks in Europe. Speaking on Friday, they expressed concerns that the European Central Bank (ECB) may need to raise interest rates again, possibly as soon as September. The ECB left interest rates unchanged this week but hinted at a possible hike due to rising oil and natural gas prices.

Oil prices have surged back above $100 a barrel, while natural gas prices are also increasing. Bundesbank President Joachim Nagel noted that the situation in the Middle East remains 'highly fragile' and 'intensely uncertain'. He added that the ECB's June rate hike put it in a good position to respond to any deterioration in inflation outlook.

Austria's central bank chief, Martin Kocher, also weighed in on the issue. While he didn't commit to a September hike, he acknowledged that it may become necessary if inflation expectations deteriorate. Financial markets currently expect at least two more rate hikes from the ECB, but market economists polled by Reuters are less certain.