By Marta Vilar – MADRID (Econostream) – Thursday’s rate hike by the European Central Bank was “just enough for now,” according to Governing Council member Primož Dolenc, who declined to provide any guidance on future policy moves.

Dolenc, who heads the Banka Slovenije, told Bloomberg TV in an interview published Friday that the Governing Council lacked sufficient evidence in March and April to fully assess the impact of the energy shock on inflation and economic growth.

“It’s obvious that inflation will be higher and economic growth will be lower, and this is the reason why we increase the interest rates today,” he said.

The move would give the ECB room to assess incoming data and developments at future meetings, he said.

“This is just enough for now to follow our main path,” Dolenc said. “The interest rate is as high as needed for inflation to remain on track.”

Echoing ECB President Christine Lagarde, he said the 25bp hike had proven “robust across all these scenarios” considered by the central bank.

Asked whether he was comfortable with market pricing for one or two additional hikes in 2026, he said that the ECB remained data-dependent and refused to provide forward guidance.

Similarly, when asked whether rates might need to be cut again within a few months, he declined to speculate, noting that policymakers had based their decision on a “really robust set of data,” including staff projections and alternative scenarios.

“Most of scenarios show that economic growth this year and for next two years will be lower than initially anticipated in December, and that inflation will be higher,” he said. “So for now we do not, let's say, predict any rate paths in the next meetings.”

Dolenc also warned that some governments were running out of fiscal space and urged policymakers to maintain sound fiscal positions, limiting support measures to those that were necessary and temporary.

Asked about a scenario in which the war ended quickly, the Strait of Hormuz reopened and oil prices returned to $60 per barrel, Dolenc said such an outcome would fall somewhere between the ECB’s mild scenario and its baseline projection.

“So, this would mean that oil prices will go down pretty fast, but still we have to think about that not only the price matters also the quantity,” he said. “So, even if Hormuz is opened tomorrow, all the oil will not come to Europe or to China or whatever, so it will be some kind of effect for longer.”

Even under the ECB’s mild scenario, inflation would remain above previously expected levels, he added.

Dolenc described services inflation as “still stubborn at 3.5%,” and said it remained “really hard to fight.”

 

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