An ECB official, Siegmann, said the bank could raise rates as soon as its next policy meeting and called gradual monetary tightening appropriate. He said the energy shock has lasted longer than expected and the euro area is now in the ECB’s adverse forecast scenario. Rising energy prices raise the risk of higher inflation while weighing on growth; higher bond yields and falling equities reflect tighter financial conditions. Gradual rate increases, he argued, help preserve policy space. The ECB r

An ECB official, Siegmann, said the bank could raise rates as soon as its next policy meeting and called gradual monetary tightening appropriate. He said the energy shock has lasted longer than expected and the euro area is now in the ECB’s adverse forecast scenario. Rising energy prices raise the risk of higher inflation while weighing on growth; higher bond yields and falling equities reflect tighter financial conditions. Gradual rate increases, he argued, help preserve policy space. The ECB remains committed to stabilizing medium-term inflation at 2% and will set rates based on incoming data, inflation expectations and the risk environment. He added that prolonged conflicts in the Middle East and Ukraine pose downside risks to growth. The Croatian central bank expects national growth of about 2.5% this year, roughly three times the euro-area average.