Speaking in Ljubljana on Wednesday, Dolenc said the current stance gives the ECB room to react if the outlook shifts. "We estimate that current interest-rate levels ensure adequate flexibility to respond to future developments," he said, noting that any next moves will depend on inflation expectations and the risks around them.
Dolenc pointed to the drivers behind stickier prices, saying "geostrategic risks and high energy prices continue to represent an important source of uncertainty, which is reflected in persistent inflation pressures." The ECB has delivered two rate hikes so far, and with inflation at its highest since 2023, officials are expected to lift rates again, most likely in December.
Central bankers signal their next move long before they make it. Market Briefs reads those signals free every morning.
When pressed on developments in France and whether the ECB's Transmission Protection Instrument might be used, Dolenc responded with caution. "Regarding the TPI, it is one of the instruments in our toolkit," he said. "The conditions for its use are precisely defined. As you know, it has never been deployed to date."
Dolenc emphasized that fiscal choices are not the ECB's remit. He said fiscal policy should be run by those responsible for it and reminded that markets can transmit stress quickly across borders. "Financial markets are interconnected, and spillovers from one market to another can occur rapidly," he said. Officials are watching how that affects the transmission of monetary policy, while keeping the line clear on who owns the budget decisions. "However, as previously stated, the sole responsibility for fiscal policy and the health of public finances lies with the individual countries and their finance ministers."
Having room to cut is different from intending to. Get the free Market Briefs daily newsletter and follow the language.
