Simkus Sees Higher Probability of Rate Hike, Downplays Inflation Concerns

European Central Bank (ECB) Governing Council member Gediminas Simkus expressed his hawkish views on interest rates, stating that the probability of a rate hike is higher than maintaining the status quo. This sentiment was shared during European trading hours on Friday.

Simkus also ruled out concerns over second-round effects of higher inflation, emphasizing that the current inflationary environment has increased and will likely continue to do so. He noted that $100 oil would have repercussions on inflation, but downplayed any potential for long-term damage.

The ECB's primary mandate is to maintain price stability, which means keeping inflation at around 2%. Simkus' comments suggest that the bank may be inclined to adjust interest rates in response to rising inflation. The market reaction was a slight recovery move in the Euro (EUR), with EUR/USD trading 0.1% higher near 1.3325.