ECB’s Dolenc Says Rate Give Flexibility for Next Decisions

The European Central Bank’s existing monetary policy stance will allow officials to react to any shock, according to Governing Council member Primoz Dolenc.

“We estimate that current interest-rate levels ensure adequate flexibility to respond to future developments,” he said on Wednesday, adding future steps will remain dependent on inflation expectations and accompanying risks.

Speaking in Ljubljana, Dolenc said that “geostrategic risks and high energy prices continue to represent an important source of uncertainty, which is reflected in persistent inflation pressures.”

The ECB has hiked rates twice and with inflation at the highest level since 2023, officials are expected to do so again, most likely in December.

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Asked about the situation in France and a possible use of the ECB’s Transmission Protection Instrument , Dolenc struck a reserved tone.

“Regarding the TPI, it is one of the instruments in our toolkit,” he said. “The conditions for its use are precisely defined. As you know, it has never been deployed to date.”

Dolenc highlighted that monetary-policy officials aren’t in charge of fiscal matters.

“The ECB — or the Governing Council, for that matter — isn’t responsible for fiscal policy,” he said. “Fiscal policy must primarily be managed by those accountable for it.”

Still, “financial markets are interconnected, and spillovers from one market to another can occur rapidly,” Dolenc said. “We monitor this very closely, observing developments and their impact — particularly on the transmission of monetary policy. However, as previously stated, the sole responsibility for fiscal policy and the health of public finances lies with the individual countries and their finance ministers.”