ECB's Kazimir Calls for Another Rate Hike to Tame Inflation Fears

European Central Bank (ECB) Governing Council member Peter Kazimir has stated that at least one more interest rate hike is necessary to combat inflation risks. This view is in line with other hawkish members of the council, who argue that a premature pause in monetary policy tightening could allow price pressures to become entrenched.

Kazimir, who serves as governor of Slovakia's central bank, made his comments in a blog post published on Monday. He emphasized that even modest progress in the Middle East conflict would not alter the need for stricter monetary policy, and that additional rate increases may be necessary if the conflict escalates.

The ECB has already raised its key interest rate by a cumulative 4.25 percentage points since July 2022, bringing it to a 22-year high. However, the recent spike in oil prices - driven partly by geopolitical tensions in the Middle East - has revived fears that inflation will remain stubbornly above the bank's 2% target.

Kazimir noted that market participants have fully priced in a 25-basis-point rate increase for September, following oil's surge past $100 per barrel last week. He added that he would need to see very convincing incoming data and geopolitical developments before advocating against another hike in September.