ECB Council Member Says Rate Hike Could Come at Next Meeting

European Central Bank Governing Council member Ante Žigman said the ECB could raise interest rates at its next meeting, citing an energy shock that is worsening inflation risks and weighing on growth.

Žigman said the shock has lasted longer than expected and that the euro area has entered an adverse scenario in the ECB’s latest projections. He said rising energy prices increase the risk of further inflation while weakening the growth outlook.

Bond yields have risen and stock prices have fallen, reflecting a tightening in financial conditions, Žigman said. He described gradual rate increases as the right approach, saying they would preserve room for later policy decisions.

Žigman said the ECB remains committed to keeping inflation at 2% over the medium term. He said future decisions would take account of incoming data, inflation expectations and the balance of risks. Prolonged conflicts in the Middle East and Ukraine could add downside risks to growth, he said.

The Croatian National Bank projects Croatia’s economy will grow about 2.5% this year, roughly three times the average for the rest of the euro area.