ECB's Kazaks Suggests Further Rate Hikes Ahead Amid Persistent Inflation

European Central Bank (ECB) member Martins Kazaks signaled that interest rates may need to rise further to combat stubborn inflation. Speaking after the ECB's latest rate hike, Kazaks emphasized that the deposit rate of 2.5% should not be seen as a ceiling.

The inflation problem persists in the euro area, with prices rising by 3.3% in August 2026 - well above the ECB's target of 2%. Kazaks attributed this to ongoing energy costs, which have been driven up by geopolitical conflicts in the Middle East.

Kazaks warned that if left unchecked, these high energy costs could spread throughout the economy, creating a feedback loop where inflation becomes embedded. He advocated for a measured approach to tightening policy, rather than aggressive leaps.