ECB Policymakers See Upside Inflation Risks but Note Stable Core Inflation, Hinting at Measured Rate Hike Approach

European Central Bank (ECB) policymakers acknowledge persistent upside risks to inflation, particularly from energy prices, but also note that core inflation has remained relatively stable, suggesting limited pass-through to underlying components. The minutes from the ECB's September 9-10 meeting revealed a unanimous agreement that inflation risks are skewed higher due to energy volatility and uncertainty. However, comments from policymaker Primoz Dolenc and the minutes suggest a measured approach to future rate hikes, with decisions made on a meeting-by-meeting basis and a preference to await further data. Euro area inflation rose to 3.8% in September, driven by energy.