ECB's Dolenc Says No Urgency to Hike If Energy Stays Calm

Dolenc warned circumstances can change quickly with several weeks still until the next policy decision and markets still volatile. The Slovenian central banker cautioned that the geopolitical backdrop has not fully calmed down. "We have seen over the past few days that hostilities have resumed," he said. "While everyone hopes for a lasting resolution, I do not believe the conflict will be resolved anytime soon. As a result, uncertainty remains elevated."

Some officials speaking in Sintra have signaled the price shock triggered by conflict is not over and that it remains to be seen how months of elevated energy costs will ripple through the economy. Dolenc said he would not read too much into the latest inflation numbers, which showed slower price gains in the euro zone's biggest three economies. "We will need further evidence to be confident that inflationary pressures are easing on a sustained basis," he said. "A renewed policy response could become warranted if oil prices were to rise significantly above the assumptions underlying our projections in early June."

The ECB's next rate decision is July 24.