European Central Bank Governing Council member Mahrouf: If inflation "goes in the wrong direction", we should be prepared for further interest rate hikes.

1. European Central Bank Governing Council member Makhouf stated in an interview with the UK’s Financial Times that if inflation "starts heading in the wrong direction," the European Central Bank should not shy away from further interest rate hikes. He warned that with the current eurozone inflation rate hovering above 3% and economic growth "slightly stronger" than predicted before the summer, he feels "uneasy." 2. Makhouf expects that the European Central Bank will raise interest rates at next week's meeting, but emphasized that this decision "will not surprise anyone." He also noted that the eurozone's economic growth forecast for this year may be "slightly" adjusted upward. 3. Regarding policy stance, Makhouf pointed out that even if the interest rate reaches 2.5%, the European Central Bank's benchmark deposit rate still would not constrain economic activity, and that restrictive policy would "roughly only begin once rates go above 2.75%." He also said that it is not yet clear whether further rate hikes will be needed after next week's increase, and that the European Central Bank should stick to a "meeting-by-meeting" approach in its decision-making, avoiding the provision of forward guidance. 4. Makhouf added that inflation expectations are "in good shape," and that there is no evidence of a "second-round wage-driven inflation effect," with related risks being under control.