A top ECB policymaker signals reduced urgency for further rate hikes as inflation risks ease and growth prospects improve.
European Central Bank policymaker Mārtiņš Kazāks said the likelihood of severe negative economic scenarios in the Eurozone has declined sharply. This shift reduces the need for rushed interest rate hikes, as risks that previously justified urgent tightening have eased significantly.
Kazāks’ comments follow a rapid drop in oil prices to pre-war levels and an improving growth outlook. Markets now price in just a 32% chance of a July rate hike, with only 28 bps of tightening expected by year-end. The next potential move is seen in September at the earliest.
The ECB is adopting a more data-dependent approach, with policymakers awaiting further evidence before committing to additional rate increases. Inflation moderation and stabilizing economic conditions support this cautious stance.