SRMED
Englishعربي
Englishعربي
A senior European Central Bank official has said the ECB may need to raise interest rates if surging energy prices threaten to reignite inflation, underscoring how quickly the policy debate has shifted as new price pressures emerge from the war. Olli Rehn, who sits on the ECB’s Governing Council, said the central bank must protect its credibility if energy costs keep feeding broader inflation in the eurozone, according to Asharq Al-Awsat.
Rehn’s remarks come at a time when the ECB has already spent much of the past two years fighting inflation with aggressive rate increases, followed more recently by caution over when and how fast to ease policy. Energy prices remain one of the biggest wild cards for Europe because the region is heavily dependent on imported fuel and electricity markets have been especially sensitive to disruptions linked to the war. If those costs climb further, households and businesses could face higher bills again, while the ECB would have to weigh whether to respond with tighter policy to prevent inflation from becoming entrenched.
The comments also fit into a wider global shift among central bankers, as shown in separate Federal Reserve minutes reported by Asharq Al-Awsat. Those minutes indicated that U.S. policymakers are prepared to raise interest rates again if inflation does not continue to cool, suggesting that major central banks are still focused on keeping price growth under control rather than assuming a smooth path back to lower rates.
For the eurozone, the stakes are especially high because higher borrowing costs would affect mortgages, business loans and government financing at a time when growth remains fragile. At the same time, failing to respond to a renewed inflation surge could weaken the ECB’s inflation target and raise questions about its resolve. Rehn’s warning signals that, despite earlier expectations for rate cuts, the central bank is still prepared to move in either direction if energy-driven inflation worsens.