ECB's Stournaras Leaves Door Open for October Rate Hike

The European Central Bank (ECB) may raise interest rates in October if energy costs surge or inflation accelerates, said Governing Council member Yannis Stournaras. The ECB has been monitoring upside risks to inflation and is considering its next steps after two rate increases since the war in Iran began.

Stournaras emphasized that policymakers cannot take stability for granted due to repeated supply-side shocks, fiscal expansion, and booming AI investment. He noted that the absence of second-round wage effects is a positive sign, but added that 'stability cannot be taken for granted.'

The ECB's next meeting is at the end of October, and markets are pricing in a high probability of a quarter-point increase in the deposit rate to 2.75%. However, some policymakers argue that further tightening could weigh on growth.