ECB's Zigman: Rate Hike Possible at Next Policy Meeting

According to Jin10, ECB official Zigman said the central bank could decide to raise interest rates as soon as its next policy meeting and that gradual monetary tightening was appropriate. Zigman said the energy shock had lasted longer than expected and the euro area had entered the adverse scenario in the ECB's latest projections. Rising energy prices increase the risk of further inflation and weaken the growth outlook, while higher bond yields and falling stock prices reflect tighter financial conditions. Zigman said a gradual rate-hike strategy would preserve room for future policy decisions. The ECB remains committed to stabilizing inflation at 2% over the medium term and will set rates based on incoming data, inflation expectations, and the risk environment. Prolonged conflicts in the Middle East and Ukraine could pose downside risks to economic growth. Croatia's central bank expects the country's economy to grow about 2.5% this year, roughly three times the average rate in the rest of the euro area.