ECB May Need More Rate Hikes to Curb Inflation Risks

Slovak central bank chief Peter Kazimir believes that the European Central Bank (ECB) may need to raise interest rates one more time to curb inflation risks. He stated that even if the current situation improves moderately, another rate increase would still be necessary.

Kazimir emphasized the importance of addressing inflation risks proactively and noted that second-round effects from rising energy costs can develop gradually and become harder to reverse once they are firmly established.

The ECB had cited the absence of major second-round inflation effects as one reason for holding rates steady in July. However, Kazimir warned that policymakers must remain cautious and take preventive action to avoid a renewed inflationary cycle.