By David Barwick – FRANKFURT (Econostream) – The chances of another European Central Bank rate increase in October will depend on the information available at the meeting and the outlook through year-end and into 2027, Governing Council member Ante Žigman said Thursday.

Žigman, Governor of the Croatian National Bank, told Bloomberg Television that policymakers would again have an intensive discussion at the October meeting and said “it will depend on the data which we are going to have at that moment.”

The Governing Council would also consider developments expected through the end of the year and the outlook for 2027,he said.

Asked about market expectations for four rate increases over the coming year, Žigman said “the markets are always speculating and they have their expectations and their rationale.”

He said ECB decisions would be based on the data, with inflation particularly important, rather than on market expectations for future interest rate moves.

Žigman said he did not believe the euro area had moved firmly into the adverse scenario set out in the ECB’s September projections.

“I don’t think so,” he said, adding that “our decision was based on the main scenario.”

The recent decline in oil prices was consistent with the volatility incorporated into the ECB’s forecast and no additional large impact on inflation was expected this year under that outlook, he said.

Žigman said the ECB was monitoring wages and other indicators for evidence that the energy shock was spreading more broadly, but said wage increases had not reached levels that would constitute a second-round effect.

The rise in inflation remained mainly related to energy and geopolitical developments, he said, adding that other inflation components remained contained and “we don’t see any major second round effects.”

Asked whether the current 2.50% policy rate, which some consider the upper end of the neutral range, made another increase harder, Žigman said, “I don’t think so.”

Policymakers would focus on keeping inflation indicators under control and would take account of inflation, second-round effects and developments in economic activity rather than frame decisions around a particular interest-rate level, he said.

Žigman also said he did not currently see a significant risk that monetary tightening would excessively restrain economic growth.

“No, for now, we don’t see that,” he said.

Second-quarter developments had increased optimism about growth, while consumer demand remained strong and investment was flowing into defense and infrastructure, he said.

Žigman said there was considerable optimism about the growth outlook but that policymakers still needed to focus on inflation, which “can jeopardize the growth.”

Artificial intelligence was expected ultimately to exert a favorable influence on inflation through higher productivity and more efficient production, notwithstanding upward price pressures associated with investment during the technology’s development phase, he said.

Žigman also said foreign-exchange interventions tended to have limited effects globally and noted that recent U.S. intervention had not produced a large effect on the euro exchange rate.