ECB Ponders Further Rate Hikes Amid Oil Price Fears

The European Central Bank (ECB) may continue to raise interest rates due to concerns about inflation. Senior ECB policy official Martin Kocher said that if international oil prices remain near $100 per barrel through year-end, the bank will have no choice but to take further rate-hike action.

Oil prices have surged over 45% since the US-Iran ceasefire collapsed in early July, breaking the $100-per-barrel mark this week. European natural gas prices have nearly doubled since June, approaching €80 (approximately $93) per megawatt-hour.

The ECB's worst-case inflation scenario projects eurozone inflation to rise to 3.2% next year if crude oil averages $99 per barrel from October through December, with natural gas at €77 (approximately $89) per megawatt-hour.