ECB's Kazaks Sees Growing Case for Higher Interest Rates

European Central Bank (ECB) policymaker Martins Kazaks believes there's a growing case for further interest rate hikes to combat inflation. Speaking to Reuters, Kazaks noted that the ECB may need to gradually raise rates above its current key rate of 2.5% to curb inflation before it seeps into wages and other prices.

Kazaks pointed out that energy prices and broader inflation remain elevated, with euro zone inflation standing at 3.3% in August. The ECB expects inflation to rise further in the coming months, with a forecast of 3.6% for the last quarter of this year.

The Latvian policymaker emphasized that the ECB can afford to move 'stepwise' and 'without rush,' citing past decisions that have proven appropriate. Kazaks also noted that the euro zone's economy is running at capacity, making it easier to pass on higher fuel costs to consumers.