By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Gabriel Makhlouf said on Friday that the ECB would be in a better position to determine the appropriate monetary policy stance at its September meeting, when policymakers will have a fresh set of projections and more incoming data.

In a blog post on the website of the Central Bank of Ireland, which he heads, Gabriel Makhlouf said inflationary pressures stemming from the renewed energy shock had not disappeared following the resumption of hostilities in the Middle East.

“Indeed, following the collapse of the truce and a return to hostilities, there is renewed upward pressure on energy prices,” he said. “Despite this, the decision not to change rates this week primarily reflects our judgement that, with the effects of the June increase still working through the economy and with limited data since our last meeting, the right course is to observe carefully how the data evolve before drawing further conclusions.”

By September, the ECB would be able to “more confidently assess the appropriate stance” needed to deliver price stability over the medium term, he said.

Makhlouf noted that June headline inflation had come in lower than expected, reflecting weaker commodity and energy prices, but said those prices had since rebounded.

“[O]ur latest internal estimate puts euro area inflation back in the region of 3% for the euro area,” he said.

By the September meeting, policymakers would have updated staff projections, two additional euro area inflation readings and GDP data, providing “meaningful new information,” he added.

Makhlouf said the key near-term issue would be whether the recent rebound in energy prices proved persistent.

He also said he would closely monitor core inflation, which had recently been relatively stable but “which I do not take for granted,” as well as wage developments for any signs that second-round effects were beginning to emerge.

On growth, Makhlouf noted that the June staff projections foresaw euro area GDP expanding by 0.8% this year, while acknowledging downside risks.

“The transmission of June’s rate increase into credit conditions and broader activity will be something we monitor carefully,” he said.

Makhlouf described this week's decision to leave rates unchanged as “prudent” and “considered.”

“September’s meeting, with its updated projections and a richer information set, will provide greater clarity on the path ahead,” he said.