BCE Warns September Rate Hike is Inevitable

In the face of rising oil and gas prices due to geopolitical uncertainties, President of the Slovak National Bank, Peter Kazimir, has warned that a rate hike at least one more time will be necessary to curb inflation. This statement echoes recent comments from ECB Chief Economist Philip Lane, who indicated that the central bank still considers the current inflation shock as moderate but requires measures to ensure inflation returns to its 2% target over the next year. Kazimir emphasized that the decision on a September hike would not solely depend on current economic data but also on geopolitical conditions in the coming weeks. 'We believe at least one more moderate adjustment will be necessary to ensure price stability,' stated Kazimir in an article published recently. This scenario reflects growing inflationary pressures in the European bloc, where rising oil and gas prices are significantly contributing to cost accumulation. The impact of these pressures on the global economy is notable, especially for regions heavily dependent on energy imports. 'We need to ensure that inflation moves from its current situation of 3% towards our target of 2% over the next year,' explained Lane. The European Central Bank’s upcoming September meeting will be crucial in determining the future steps in monetary policy. 'The decision on rate hikes will be based on a careful assessment of inflation risks and future economic conditions,' concluded Lane.

Source: Valor Econômico