The governor of the central bank of Luxembourg and a senior European policymaker warned that inflationary pressure is increasing the need for the region’s central bank to raise its interest rates, according to The Wall Street Journal. On Monday, Yves Mersch, a member of the European Central Bank’s governing board, asserted, “The board of governors remains ready to react in a resolute manner” to contain inflation, highlighting “Heightened risks materializing and weighing on the stability of medium-term prices.” He warned that the situation requires “great vigilance.”
Mersch said a critical goal for the ECB would be to ensure that recent spikes in inflation that have been led by surging energy and commodity prices does not lead to broader inflationary pressure. The stern language could suggest that the central bank is preparing to raise interest rates. However, the leader was upbeat about the economic outlook for the eurozone, and said that the current loose policy “is giving considerable support to economic activity.”
