Makhlouf says ECB not yet seeing second-round inflation effects

In remarks on September 17, the ECB policymaker kept the door open to an October rate move while flagging discomfort with inflation above 3%

ECB Governing Council member Gabriel Makhlouf said on September 17 that the central bank is not yet seeing second-round effects from the recent rise in inflation, but added that every ECB meeting, including October's, remains "live" and that he would not rule out a rate increase then, according to Bloomberg Television.

The remarks build on comments he made on September 11, when he warned that a drawn-out Middle East conflict could keep inflation elevated, while cautioning that raising rates "a great deal more" could carry real costs to growth, Reuters reported. The ECB raised its deposit rate for the second time this year on September 10, and Reuters sources said policymakers expected further tightening, possibly as early as October.

Makhlouf has also said he feels "uneasy" about euro area inflation staying above 3%, even as growth has proven stronger than expected, according to a Financial Times interview cited by Econostream Media. He has described current policy as "not restrictive," saying that territory would only begin once rates moved above roughly 2.75%. At its July meeting, the Governing Council held its three key rates steady and said it was closely watching second-round effects from the energy shock.

Makhlouf's conditional language does not add fresh urgency to the ECB's posture. His acknowledgment that second-round effects are not yet present, paired with his discomfort over 3% inflation, fits with the Governing Council's recent drift toward a pause, even as his refusal to rule out an October move keeps the option nominally open. Taken together, the remarks reinforce the current holding pattern rather than signal a shift toward further tightening.