Overview
European Central Bank Governing Council member Olaf Sleijpen said officials will do everything necessary to restore inflation to the central bank's 2% objective, and that they will have considerably more information available when they convene in June.
"The ECB will, of course, do everything in its power to ensure that inflation returns to price stability," Sleijpen said Tuesday in Amsterdam.
Data and deliberation ahead of June
Sleijpen noted that policymakers will "have a great deal more data than we did at the previous meeting," and that decisions next month will be made based on that additional information. He emphasized that the June session will be informed by the latest readings across price indicators and other economic signals.
Executive Board member Isabel Schnabel, in an interview published Tuesday, argued that the ECB should raise interest rates in June. She stated: "Given the size and the persistence of the current shock, looking through is no longer an option." By contrast, Chief Economist Philip Lane adopted a more cautious stance.
Inflation drivers and trade-offs
Sleijpen said officials are analyzing how the recent rise in energy prices - which has already contributed to higher headline inflation - is filtering through to other measures of price pressure. The bank is balancing inflationary impulses from the Iran war and the related jump in energy costs against indicators of weaker economic growth and potential financial stability risks.
Headline consumer prices rose 3% in April, above the ECB's 2% goal.
What this means for markets and policy
The comments reflect policymakers' focus on incoming data and the tension between externally driven inflation shocks and domestic demand conditions. Officials have explicitly linked decisions to the evolving picture of price pressures and to risks on the growth and financial stability fronts.
Bottom line - The ECB has signaled a readiness to act to return inflation to target, while indicating that next month’s deliberations will hinge on a larger body of incoming data and on the relative weights of energy-driven inflation, growth softness, and financial stability concerns.