- The European Central Bank must tighten policy if inflation does not improve.
- Rising energy prices due to the conflict in Iran are putting pressure on rates.
- Kocher indicates a possible change in interest rates at the next meeting (June 11).
The European Central Bank (ECB) will have to tighten monetary policy if the inflation outlook does not improve significantly. He stated this in an interview with Monday’s edition of the Neue Zürcher Zeitung (NZZ). member of the ECB Board of Governors Martin Kocher. TASR informs about it based on a Reuters report.
Energy prices continue to rise as a result of the conflict in Iran, and if the situation does not improve significantly, “it will be impossible to avoid a change in interest rates in the near future.” Kocher said, referring to the upcoming ECB meeting scheduled for June 11.
At the last meeting in April, the ECB did not raise rates despite intensified inflationary pressures. That decision was justified, however, the bank should not wait too long to tighten monetary policy if the situation with energy prices does not improve quickly and fundamentally.
“It is clear that if the war continues and energy prices remain high, the risk of secondary effects will increase,” Kocher said in response to a question about the consequences of the war for the wider eurozone economy. “However, this impact may differ from the rise in inflation in 2021-2022 as demand is now weaker,” explained the representative of the ECB.
