Agencies ECB weighs more rate hikes as energy costs rise.
Synopsis The European Central Bank may need to raise interest rates further to contain inflation as higher fuel costs linked to the Iran conflict risk feeding into wages and consumer prices.
Policymaker Martins Kazaks said gradual tightening remains possible.
By Anupam Nagar, ETMarkets.com Sep 14, 2026, 02:33:00 PM IST Follow us The European Central Bank may need to gradually raise interest rates further to contain inflation before higher fuel costs caused by the Iran war feed into wages and broader prices, ECB policymaker Martins Kazaks told Reuters.ADVERTISEMENT The ECB raised its key interest rate to 2.5% from 2.25% on Thursday, marking its second hike this year.
The central bank also warned that inflationary pressures stemming from the conflict in Iran could prove persistent, strengthening expectations for further monetary tightening as early as October.
However, he said policymakers could continue tightening monetary policy in a gradual and measured manner.Kazaks believes previous policy decisions have given the ECB room to respond without rushing into more aggressive moves.ADVERTISEMENT The policymaker also highlighted the eurozone's economic resilience, noting that the economy is operating close to capacity.
This could increase the likelihood that higher energy costs are passed on to consumers through prices and wages.Energy costs pose wage and price risksKazaks warned that a narrowing output gap could strengthen the transmission of higher energy costs into consumer prices and wages, creating an additional upside risk to inflation.ADVERTISEMENT The ECB expects inflation to average 3.6% in the final quarter of this year.
