FRANKFURT, July 24 (Reuters) - Inflation risks are high and the European Central Bank may need to raise interest rates once again, three policymakers said on Friday, but all stopped short of calling for an outright hike at the bank's next meeting in September.
The ECB left rates unchanged on Thursday and offered strong clues that a hike in September is likely since oil prices are back around $100 a barrel and natural gas prices are also surging.
This has reinforced expectations that the ECB will pull
the trigger after the summer break, even if policymakers were more measured in their public commentary.
"We are seeing in the Middle East that the situation remains highly fragile," Bundesbank President Joachim Nagel said in a statement. "We are still facing intense uncertainty."
Nagel said the hike in June put the ECB in a good position to respond to any deterioration in the inflation outlook.
Oil prices are moving near the ECB's "baseline" scenario outlined in its June projection and those figures were predicated on more policy tightening in the months ahead.
Others voiced similar views.
"The risks ahead remain high," Slovenian central bank chief Primož Dolenc said in a blog post, adding that developments around the war in Iran reinforce the adverse risk.
The ECB said on Thursday that risks to economic growth were skewed towards more negative outcomes than projected while inflation risks were to the upside.
Austrian central bank chief Martin Kocher, meanwhile, said a hike may become needed but it was not clear if it would be in September.
"I think everybody knows if the inflation outlook becomes worse, if there is a situation where inflation expectations deteriorate, for instance, the medium-term ones, then there is a necessity to act," he told Bloomberg TV.
Financial markets see at least two more rate hikes from the ECB with the first move fully priced in by October and the second by February. Market economists polled by Reuters, however, only see a single hike in September.
(Reporting by Balazs Koranyi and Francosi Murphy; Editing by Kirsten Donovan and Jamie Freed)
