By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Peter Kažimír on Friday said the ECB’s work on inflation was not finished and declined to rule out taking monetary policy into restrictive territory.

Kažimír – who a year after his mandate formally ended still remains at the head of the National Bank of Slovakia thanks to a political impasse, but may find himself removed automatically if the May 2025 guilty verdict in his corruption case is upheld – told Bloomberg that price pressures were spreading through the Eurozone economy.

“Our mission hasn’t been complete yet,” he said. “It’s too early to discuss whether policy needs to become restrictive. But I definitely wouldn’t exclude it considering how price pressures are spreading through the economy.”

The inflation outlook had “clearly worsened since March,” Kažimír said.

“Energy price pressures are seeping into the economy,” he said. “We see it in core inflation and this is something that’s dangerous.”

Kažimír did not say whether he saw July or September as the more likely timing for a move after June, noting that September would bring updated staff projections.

“The June inflation figures – the core rate particularly – might be decisive,” he said. “But there’s no agreement on July, and of course in September, we will get new projections again. It’s important to decide meeting by meeting.”

The latest ECB forecasts assumed three rate hikes, while underlying price pressures remained above target in the medium term, he said.

“Our decisions are driven by our commitment to that target,” Kažimír said.

Wages were “under control” and policymakers had not yet seen larger spillover effects, he said, but such effects were “lurking and they will come.”

Energy costs would remain elevated for longer than the ECB would like even if the conflict with Iran were resolved, given damaged production infrastructure, he said.

Kažimír warned that upstream price pressures were beginning to emerge and cautioned against relying too heavily on favorable base effects in the inflation outlook.

The ECB had “started looking for a new good place, one that allows us to deliver 2% inflation,” he said. “The markets have a good sense of where that might be,” he said.

As for fears that policy tightening would throttle activity, “Growth is sluggish but there’s some kind of resilience, so the economy will digest it,” he said.