European Central Bank Governing Council member Dimitar Radev, who also serves as Governor of the Bulgarian National Bank, said both the October and December meetings remain open to further interest rate adjustments, arguing that policymakers should not wait for confirmation of second-round inflation effects before acting. His comments are part of the regular run of policymaker speeches that markets monitor closely ahead of each rate decision, when officials often signal their thinking before settling policy as a group.

Radev warned that delaying action until wage and broader price pressures are fully visible could leave the ECB behind the curve. Second-round effects describe the way an initial price shock can feed into wages and other costs, making inflation harder to bring back to target. He noted that 2.5% could be around the neutral interest rate level — the level viewed as neither stimulating nor restraining the economy — while stressing that monetary policy decisions must remain guided by incoming economic data. Estimates of where neutral sits vary among euro area policymakers, and the ECB has repeatedly said it takes its decisions meeting by meeting on the basis of incoming data rather than pre-committing to a path.

He also said the ECB's updated staff projections in September are expected to show subdued inflation and growth in the near term. The ECB publishes fresh staff projections four times a year, and the September update will incorporate the latest data on inflation, growth and wages. Policymakers must additionally account for tighter financial conditions when assessing the appropriate policy stance, he said, highlighting the impact of higher borrowing costs and restrictive credit conditions on economic activity. The ECB's quarterly bank lending survey is among the series officials track to gauge how tighter policy is passing through to credit.

Radev's comments lean on the hawkish side, although they include a layer of cautiousness. The ECB is widely expected to hike interest rates by 25 bps in September, bringing the policy rate to 2.50%. This was also confirmed by "ECB sources," which reported that the central bank is ready to raise interest rates in September but added that there is little appetite to signal further tightening afterwards. That puts the focus on the September decision and the new staff projections, with the October and December meetings Radev flagged as live the next occasions on which the question of further adjustments could come into play.

Source: ForexLive