Patsalides Warns ECB May Keep Interest Rates High Amid Persistent Oil Price Pressures

Christodoulos Patsalides, an ECB Governing Council member and Central Bank of Cyprus Governor, warned that persistently high oil prices pose a risk to inflation in the eurozone. Speaking at an event in Nicosia, Patsalides emphasized the importance of vigilance as energy price channels remain a significant upside risk.

Patsalides noted that if elevated oil prices prove to be sustained rather than temporary, the pass-through to consumer prices could become more pronounced. He stressed that the ECB's monetary policy stance must remain data-dependent and flexible.

The current interest rate of 4% is a record high for the ECB in its fight against inflation, which peaked at 10.6% in October 2022. While headline inflation has since fallen to 2.4% as of March 2025, core inflation remains sticky. Patsalides' remarks suggest that the ECB may need to keep rates higher for longer if energy costs remain elevated.