European Central Bank Governing Council member and Belgian central bank governor Pierre Wunsch said the ECB may need to raise interest rates further.
"We may have to raise rates again," Wunsch said in an interview on Wednesday. "Because there is significant uncertainty regarding energy, and artificial intelligence (AI) could also introduce uncertain factors, I am no longer forecasting the timing of a rate hike."
Speaking on the sidelines of the International Monetary Fund (IMF) annual meetings in Bangkok, Wunsch said he could not determine whether the ECB would act later this month or wait until its final policy meeting of the year to raise rates. "Ultimately, whether it is October or December does not matter that much," he said. "The market already expects the ECB to take further action, so another rate hike is a reasonable baseline scenario, but there is still considerable uncertainty at present."
Economists expect the ECB to deliver a final rate hike in December, which would lift the deposit rate to 2.75%. That level is considered to be the point at which policy would begin to restrict economic activity. Some officials, including Chief Economist Philip Lane, have previously said that only a "moderate" policy response is needed to restore price stability.
Wunsch believes inflation is too high and noted that market expectations have shifted, with "no longer expecting an October rate hike" at present. He said the ECB has consistently emphasized that policy is data-dependent and decisions are made meeting by meeting, so "no possibility can be ruled out."
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