ECB Governing Council Member Kocher Warns High Oil Prices Could Force More Rate Hikes

According to Jin10, ECB Governing Council member Martin Kocher warned that if oil prices continue to hover around $100 a barrel before year-end, the central bank will have to raise interest rates further. After the European Central Bank raised borrowing costs for the second time on Thursday, the Austrian central bank governor said inflation risks were higher than a few months ago because tensions in the Middle East remained elevated and energy prices stayed high. Since the collapse of the U.S.-Iran ceasefire agreement in early July, oil prices have risen more than 45% and moved above $100 a barrel, while European natural gas prices have nearly doubled since June to close to 80 euros per megawatt hour. Kocher said that if oil and gas prices move toward an adverse scenario, monetary policy must take those changes into account, and he added that inflation risks would intensify further.