The European Central Bank has done enough for now to combat inflation but a further increase in interest rates later on cannot be ruled out, Bank of Finland board member Tuomas Valimaki said on Tuesday.

The ECB has raised rates at each of its past ten meetings but signalled a pause for October, fuelling a debate among policymakers over whether the ECB was done hiking rates or if further tightening was on the table.

“The key policy rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to our target,” Valimaki said, repeating the ECB’s current guidance.

“But taking into account the risks surrounding the inflation path, this does not necessarily mean there will be no more interest rate increases,” said Valimaki, who is filling in for Bank of Finland Governor Olli Rehn.

Valimaki argued that with inflation staying above the ECB’s 2 per cent target for so long, any additional delay in curbing price growth would be unacceptable.

Inflation fell to 4.3 per cent in September from 5.2 per cent a month earlier, a bigger-than-expected drop that should fuel confidence that the rate of price growth was indeed coming back down.

However, price growth is seen levelling off next year and holding broadly steady at around 3 per cent for much of 2024, mostly due to governments unwinding subsidies. So the big question is whether disinflation can resume into 2025 and get back to 2 per cent by the close of that year.

“We will assess the inflation outlook also in the light of the dynamics of underlying inflation and the strength of monetary policy transmission,” Valimaki said.

Rehn, who has taken a leave of absence to run to become the next president of Finland, picked Valimaki, the Bank of Finland’s long-time alternate on the Governing Council, to take his place on the council.