The European Central Bank may be forced to increase its key borrowing costs in December to stop rising energy costs from triggering broad-based inflation, according to Governing Council member Joachim Nagel. The Bundesbank president warned that another interest rate hike is nearly certain unless the economic outlook for inflation improves significantly, citing September data that showed price pressures were higher than the central bank had expected.

Nagel’s comments align with other hawks on the council, including Peter Kazimir and Dimitar Radev, who have stated that current rates are inadequate and that the bank should not wait for second-round effects before acting. This push for tighter policy comes as inflation is forecast to exceed 4% in the coming months, doubling the ECB’s 2% target. While some officials maintain that current responses are measured because price shocks are largely imported, sources cited by Reuters indicate the bank is weighing a 25 basis point increase on Dec 17 that would lift the deposit rate to 2.75% from 2.50%.