An ECB policymaker justifies the April rate hold but warns a hike may be unavoidable in June amid rising inflation risks.
European Central Bank policymaker Kocher defended the decision to keep rates unchanged in April, citing heightened inflation risks from the Middle East conflict. While the economy and labor market remain resilient, prolonged energy price pressures could trigger second-round effects and stagflationary trends.
Markets are pricing in an 80% chance of a June rate hike, reflecting expectations that the ECB cannot delay action much longer. Kocher emphasized vigilance, stating that a rate move may be unavoidable unless conditions improve significantly.
The ECB faces a balancing act, with medium-term inflation expectations stable but early signs of upward pressure emerging. Policymakers are avoiding forward guidance but hint at near-term tightening.