European Central Bank Governing Council member Gabriel Makhlouf, the governor of the Central Bank of Ireland, said on the 23rd that the ECB would be forced to raise interest rates again if the surge in energy prices spills over into other areas. In an interview with public broadcaster RTE, Makhlouf noted that inflation remains above target but that no second-round effects are yet visible in prices, adding that if such a situation arose, the ECB would have to act again to meet its goal. He said, however, that at present no signs of such second-round inflation effects are apparent. Earlier this month, after the ECB decided on its second rate hike of the year, Makhlouf said that a "significant" further increase could also deal a blow to economic growth.
ECB official says further rate hikes may be needed if energy-driven inflation spills over, implying higher policy rates/yields.
ECB official signals possible further rate hikes, supporting the euro versus the dollar.
