ECB Executive Board member Dolenc said interest-rate policy can prevent a surge
in energy prices from spilling into broader, persistent inflation. He noted
monetary policy cannot directly affect energy shocks, geopolitics or structural
competitiveness, but can stop an initial price shock from becoming more
widespread and long-lasting. The ECB has raised rates twice and is expected to
hike again, most likely at the December meeting. September inflation rose to
3.8%, near twice the ECB’s 2% target; Dolenc said roughly 3% inflation is likely
to persist through year-end and, absent new shocks, inflation should gradually
return to 2% over the next two years while economic growth accelerates.
