In an interview, European Central Bank Vice-President Boris Vujčić backed maintaining a gradual pace of monetary policy tightening for the time being, while stressing that decisions will remain data dependent and be taken meeting by meeting. Energy prices have risen above the assumptions in the latest projections and are expected to remain elevated for longer, but the ECB will assess a broader range of indicators rather than respond solely to energy market movements. Vujčić said oil price changes pass through rapidly to headline inflation, while gas prices have a more persistent effect through utility bills and production costs. A harsh winter would deepen the impact on GDP and real incomes. Food inflation is projected to rise gradually and peak at 3.4% in the third quarter of 2027, partly because of the delayed effect of severe European droughts. Monetary tightening is already feeding into mortgage rates, corporate lending rates and bank funding costs, although exports and stronger private consumption have supported economic activity. The recent rise in sovereign bond yields does not currently threaten financial stability, and European banks remain well capitalized, liquid and profitable. Vujčić favored minimum reserve requirements as a straightforward way to absorb excess liquidity rather than charging fees or using a complex tiering system, without pre-empting Governing Council discussions. He also argued that European bank competitiveness requires completion of the banking union and savings and investments union rather than lower capital requirements or deregulation.
2026-09-18European Central Bank
European Central Bank Vice-President Boris Vujčić backs gradual tightening as elevated energy prices reshape the outlook
European Central Bank Vice-President Boris Vujčić backed gradual, meeting-by-meeting tightening as elevated energy prices increase uncertainty for inflation and growth. He said the ECB would consider broader economic data rather than energy prices alone and projected food inflation to peak at 3.4% in the third quarter of 2027. Vujčić also favored minimum reserve requirements to absorb excess liquidity and called for deeper EU financial integration rather than deregulation.