European Central Bank Governing Council member Gabriel Makhlouf, the governor of the Central Bank of Ireland, said on the 11th that while a prolonged conflict in the Middle East carries the risk of keeping inflation elevated, the ECB could also harm economic growth if it raises interest rates "significantly further." Writing in a blog post on the Central Bank of Ireland's website, Makhlouf said "there remains considerable uncertainty around the outlook," adding: "The short-term factor keeping inflation high remains energy. If the conflict in the Middle East drags on, there is a risk that inflation stays elevated for a prolonged period. But on the other side of the uncertainty, pushing rate hikes significantly further from current levels could carry real costs in terms of growth." The ECB raised rates on the 10th for the second time this year. According to sources who spoke to Reuters, policymakers expect further monetary tightening in the coming months, with a possible move as early as October.
ECB governor warns that pushing rate hikes significantly further could harm growth, signaling caution on additional tightening after the 10th's hike.
ECB official cautions against significantly further rate hikes, tempering expectations for more aggressive tightening that would support the euro.
