European Central Bank chief economist Philip Lane said a further interest rate hike in December could be warranted if data over the coming weeks do not materially change the outlook. Speaking to Bloomberg TV in London, he said a further 25 basis point increase would bring the policy rate to the upper end of the range the ECB estimates is neutral for growth.
Lane said euro area inflation could be slightly above 4 percent at year-end. Food price increases and core inflation could accelerate further early next year, he said. The ECB’s inflation target is 2 percent.
Energy prices and the outlook
Lane said oil prices may still change significantly until December. Inflation has not yet peaked, he added. The ECB has already raised rates twice this year because of energy price increases following the Iran war.
The ECB will decide again next year based on incoming data, Lane said. Markets should therefore weigh the performance of the wider economy alongside energy prices, he added.
Growth risks
The Middle East conflict and rising bond yields could slow the economy. The European economy is currently growing moderately and steadily, according to the reporting. Investors expect a rate hike in December and further tightening in 2027.
Mārtiņš Kazāks, now a central bank governor, sees further tightening as possibly warranted, Bloomberg reported.
Related: ECB's Zigman sees high chance of December rate hike · Bank Negara holds rate at 2.75%, Commerzbank sees hike in Q1 2027
Source: European Central Bank
