ECB's Kaasik Signals More Hikes If Inflation Risks Materialise

Newsquawk Staff reported on September 18th that the European Central Bank's (ECB) Estonian member, Kaasik, stated that more tightening is necessary if inflation risks materialise. This comment comes from a governing council member known for sitting at the hawkish end of the spectrum.

While the language used by Kaasik can be seen as conditional and non-committal, it still serves as a signal to markets. His dismissal of the neutral rate debate is also noteworthy, as officials who downplay this discussion often indicate that the destination - or terminal-level interest rate - is less contentious than the pace of hikes.

The remark from Kaasik arrives amid rising inflation concerns and follows a string of hawkish comments from other ECB members. However, whether comparable conditionality will appear from core governors closer to the centre of gravity remains to be seen.