ECB Signals Further Rate Hikes as Inflation Stays Above Target
ECB officials from Germany and Estonia have confirmed the central bank is prepared to push rates into mildly restrictive territory if energy costs continue to drive inflation above target. This hawkish stance aligns with money markets pricing in at least three more hikes over the next year, as policymakers warn that recent energy spikes were not fully captured in their latest projections.
According to GN markets/policy (en-US), Bundesbank President Joachim Nagel and Estonia's governor Ülo Kaasik explicitly acknowledged the need for further tightening, with Nagel stating the ECB may need to enter 'mild restrictive territory' if energy-driven inflation persists. Kaasik added that current market expectations of additional hikes are understandable given the risk that fuel and food price increases will last longer than previously forecasted.
Source: GN markets/policy (en-US)Wall Street banks now expect additional ECB rate hikes after a hawkish decision confirmed inflation will remain above 2% for an extended period.
Source: GN markets/policy (en-US)
