ECB Vice-President discusses energy prices, inflation, and financial stability

In an interview conducted on September 16, 2026, Boris Vujčić, Vice-President of the European Central Bank (ECB), addressed recent developments affecting monetary policy and economic outlook.

He noted that energy prices have continued to rise since the ECB’s latest projections, influencing market expectations for interest rates. The ECB emphasizes that it does not provide forward guidance and makes decisions based on a broad set of data, not solely energy prices.

Market pricing indicates several rate hikes over the next 12 months, but the ECB considers this justified only if inflation remains high and impacts household incomes and consumer behavior, potentially dampening GDP.

Regarding gas supplies, lower storage levels and geopolitical uncertainties pose risks, especially if winter proves harsh. The ECB’s outlook for food inflation anticipates a gradual increase, peaking at 3.4% in Q3 2027, influenced by recent droughts and El Niño effects.

The ECB considers the resilience of the euro area economy to tightening measures as notable, supported by strong exports and private consumption. The central bank maintains a gradual approach to interest rate increases, avoiding specific labels like “restrictive”.

Long-term sovereign bond yields have risen due to inflation expectations, fiscal deficits, and global rate adjustments. The ECB monitors these developments for financial stability, noting that the banking sector remains strong, though emerging risks include AI-related cybersecurity and market valuations.

On technological innovation, the ECB recognizes the uncertain productivity impact of AI and the gradual nature of the China 2.0 shift, exemplified by changes in manufacturing quality and costs. Vujčić supports using reserve requirements as a tool to sterilize excess liquidity, favoring this over tiering or fees.

Addressing EU banking competitiveness, he emphasizes the importance of completing banking and savings unions to foster a truly integrated financial market, reducing fragmentation and improving transmission of monetary policy across member states.