A top ECB official argues for further tightening, citing risks of second-round effects even if inflation eases slightly.
European Central Bank Governing Council member Peter Kazimir said at least one additional rate hike is necessary to counter potential second-round inflation effects. He warned that delaying action until such effects become visible would be costly to reverse, reinforcing the need for preemptive tightening.
Markets currently price a 67% probability of a September hike, with 38 bps of tightening expected by year-end. Kazimir’s stance contrasts with some policymakers who favor a more cautious approach, as he insists on further tightening even if inflation shows signs of improvement.
The remarks underscore a hawkish bias within the ECB, with Kazimir suggesting a September move is likely unless data shifts significantly. His comments align with growing concerns over persistent price pressures in the eurozone.