In his first sit-down with a global outlet since taking office in June, Croatian central-bank chief and ECB Governing Council member Ante Zigman told Bloomberg Television's Oliver Crook there is "a lot of optimism for growth." His caveat: "We really need to care about inflation, which also at the end can jeopardize the growth." The near-term task, he said, is pulling inflation that's north of 3% back to the ECB's 2% target.
Oil and natural gas prices have jumped again, and analysts expect headline inflation to drift toward 4% in the coming months. Even so, the euro-area economy has so far weathered fallout from the Iran war. Zigman stressed that the broader economy has not seen inflation ripple widely yet. "For now, it's still mostly related to the energy, mostly related to the geopolitics, which we know very well can be changed in a very short period of time," he said. "Those other segments of inflation are still contained and we don't see any major second-round effects."
After a second consecutive rate increase, the ECB is figuring out how much further it needs to go to corral prices. From current levels, traders anticipate no fewer than three additional increases, a trajectory that would push the 2.5% deposit rate past what is considered the economy's neutral setting. Inside the Governing Council, Bundesbank President Joachim Nagel has signaled that mildly restrictive settings may be necessary, while Executive Board member Piero Cipollone has cautioned against taking tightening too far.
Zigman argued the precise location of neutral should not be the main focus. "For us it's important, and especially for myself, that all inflation indicators are under control," he said. He also rejected claims that current conditions match the adverse scenario in the ECB's latest outlook.
Keeping a steady eye on inflation helps protect the value of your savings. Join Briefs Finance CEO Jaspreet Singh on September 29th for a FREE live investor workshop, How to Profit From A Dollar That's Losing its Value, where he shows how we're spotting investment opportunities as the dollar falls. Save your spot.
If energy stays volatile and the ECB keeps tightening, borrowing costs in the euro area could continue to climb even as wage growth remains contained. For everyday budgets, that mix can feel like higher prices meeting pricier credit, with the growth outlook holding up for now but sensitive to shocks.
Thoughtful planning and discipline can help you grow and preserve your financial future. Our CEO Jaspreet Singh is hosting a FREE live investor workshop, How to Profit From A Dollar That's Losing its Value, on September 29th. Sign up free to join him live.
