By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Ante Žigman said Wednesday that the peace agreement, the reopening of the Strait of Hormuz and the fall in oil prices would have a positive effect on inflation, even as he defended the ECB’s latest rate hike as necessary to bring price pressures under control.

Žigman, who heads the Croatian National Bank, made the comments in an interview with Croatian television HRT.

The ECB’s decision to raise interest rates showed that it would not “stand with its arms crossed” in the face of inflation, he said.

The hike was good for both Croatia and the Eurozone, according to Žigman.

The geopolitical situation had changed after the signing of the peace agreement, the reopening of the Strait of Hormuz and the fall in oil prices, he said.

“That will have positive effects on inflation,” Žigman said, adding that it would lower inflation rates.

Asked whether citizens should fear further rate increases, Žigman said the first concern had to be price stability.

“The stability of prices is what matters most to citizens,” he said.

Inflation required caution and timely action, Žigman said, pointing to his experience of Croatia’s hyperinflation period.

Inflation leaves “a strong mark” and requires “extreme caution”, he said.

Macroprudential measures adopted in Croatia had already produced results by reducing credit activity and tightening consumer lending, Žigman said.

Those measures, which were tightened last year, would remain in place toward the end of this year, he said.