European Central Bank policymaker Martins Kazaks has said the argument for additional interest-rate increases is becoming stronger.

The ECB recently lifted its policy rate to 2.5%, but officials are concerned that inflationary pressure may remain persistent.

Eurozone inflation reached 3.3% in August, and higher fuel prices linked to turmoil in the Middle East could spread into wages and the broader cost of living.

Kazaks, who also heads Latvia’s central bank, cautioned that the current rate should not automatically be regarded as the upper limit.

He did not commit to supporting another increase in October and instead favoured a gradual assessment based on incoming economic evidence.

Businesses and consumers may face higher borrowing costs if policymakers conclude that energy and food inflation is becoming entrenched.

The debate highlights the difficult balance between controlling prices and avoiding unnecessary damage to investment, housing and economic growth.

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Illustrative photo: cmophoto.net/Unsplash.