Ante Žigman, Governor of the Croatian National Bank (HNB) and a member of the European Central Bank's (ECB) Governing Council, commented that the ECB's recent decision to raise key interest rates by 0.25 percentage points will contribute to reducing inflationary pressures in Croatia. This marks the second rate increase this year, bringing the deposit facility rate to 2.50 percent.
Žigman indicated that the tightening of monetary policy is a response to rising energy prices and associated inflationary pressures. He noted that the annual inflation rate in the euro area increased from 2.9 percent in July to 3.3 percent in August, while in Croatia, inflation also slightly strengthened in August due to energy price increases, though it is now converging with the euro area average.
Despite the energy shock, the eurozone economy has shown resilience, and economic activity growth could be stronger than previously expected, further supporting the decision to raise interest rates. Žigman added that uncertainty remains high, and the ECB Governing Council considered multiple macroeconomic scenarios related to oil and gas price movements. They will continue to closely monitor indicators, especially those suggesting indirect and secondary effects of price increases. Croatia's inflation, while rising in August, has generally been declining in recent months and is approaching the eurozone average.
