European Central Bank Governing Council member Gabriel Makhlouf has indicated that a rate hike in October remains a possibility should the economic situation warrant such action. During an interview on Thursday, the Irish central bank governor stated that while there are currently no alarming signs of inflation transmitting into wages, policymakers will determine borrowing costs based on incoming data.

When asked whether this approach would also apply to the next policy meeting scheduled for October 29, Makhlouf remarked that during periods of heightened uncertainty, every ECB gathering functions as a live session. He emphasized that one can neither rule out any policy option for upcoming meetings nor pre-commit to a specific course of action in advance.

The interview took place following the US Federal Reserve's rate increase on Wednesday. Financial markets are currently struggling to assess whether the ECB will deliver a consecutive hike after last week's move. Investors are pricing in at least three additional quarter-point increases over the next twelve months, though Makhlouf declined to comment directly on these market expectations.

He stated that markets understand the institution's commitment to achieving its 2% inflation target, adding that current data has not yet reached the desired level. Makhlouf noted he would not judge whether market forecasts are accurate or not.

According to sources familiar with the matter, policymakers believe another rate increase could occur as early as October following this month's decision. The next round of quarterly projections is scheduled for December, with economists generally viewing that gathering as a more probable timing for action.

Makhlouf made these remarks ahead of attending meetings with European finance ministers and central bank governors in Dublin. He remains vigilant given the current international environment. With oil and natural gas prices continuing their sharp ascent, eurozone inflation is expected to exceed the current 3.3%, moving further away from the ECB's 2% target.

He acknowledged that while there are no concerning second-round inflation effects visible at this stage, it is evident that the energy shock originating from the Iran conflict has not subsided, and upside risks to inflation remain present.