ECB policymaker MAKHLOUF warned the central bank should be prepared to raise
rates further if inflation "moves in the wrong direction." He flagged euro-area
inflation stuck above 3% and growth running slightly stronger than pre-summer
forecasts, calling that concerning. MAKHLOUF said next week’s decision "should
not surprise anyone” and expects a small upward revision to this year’s growth
forecast. He judged the deposit rate at 2.5% is not yet restrictive and said
policy would likely become restrictive only once rates exceed about 2.75%. He
added it is unclear whether hikes beyond next week will be needed, endorsed a
meeting-by-meeting approach without forward guidance, and said inflation
expectations are well anchored with no sign of wage-driven second-round effects.
