ECB's Kaasik Defends Investor Bets on Further Rate Hikes Amid Rising Oil Prices
European Central Bank (ECB) Governing Council member Ulo Kaasik says it's understandable that investors expect further rate hikes, given the current situation. The ECB delivered a quarter-point rate hike to 2.5% last week, with officials expecting to raise borrowing costs further to contain inflation hovering around 3%. With oil back above $100 a barrel, investors are now pricing in three more hikes.
Kaasik stated that the current interest-rate level is not high enough yet, and it's not directly tightening economic activity. He added that investor bets on additional rate hikes are logical given the present situation.
His Lithuanian counterpart, Gediminas Simkus, also stressed that consumer-price growth is too strong. Speaking separately, he said inflation is too high both in the euro zone and Lithuania, and the primary reason for this rise in inflation is energy to varying degrees.