European Central Bank (ECB) Governing Council member Mahrouf says the bank must be prepared for further interest rate hikes.

According to a report by the Financial Times, ECB Governing Council member Mahrouf stated that if inflation starts moving in the "wrong direction", the European Central Bank (ECB) should not rule out further interest rate hikes. He noted that eurozone inflation is currently hovering above 3%, while economic growth is slightly stronger than pre-summer forecasts, a development that leaves him "uneasy". Mahrouf added that even if the benchmark deposit rate rises to 2.5%, monetary policy will not yet be restrictive for economic activity; truly restrictive policy will only kick in once rates exceed roughly 2.75%. He projected that the ECB will also revise up its eurozone economic growth forecast slightly this year. Mahrouf said it is currently unclear whether further rate hikes will be needed after next week’s increase, and the ECB should stick to its "meeting-by-meeting" decision-making approach, avoiding forward guidance. He also pointed out that inflation expectations are currently well-anchored, with no signs that wages are triggering a second-round inflation effect, and related risks are being contained.