ECB's Kazaks: Inflation Is Unsettling, Conditions Exist for Further Action
Nashnova编辑部
ECB Governing Council member Kazaks called inflation near 3% "somewhat uncomfortable" and said conditions are in place for further hikes — but the September decision still hinges on incoming data. Markets have nearly fully priced in a 25 bp move.
What exactly did Kazaks say?
The Latvian central bank governor and ECB council member said inflation hovering near 3% is "somewhat uncomfortable."
He stated the ECB has the conditions to act further if needed, aiming to push inflation back to the 2% target within a reasonable timeframe.
Yet he stressed it is too early to call the September meeting — "there are pros and cons to further rate increases."
What is the market pricing — and why won't he engage?
Markets have nearly fully priced in a 25 basis-point hike to the deposit rate in September, extending the June move.
Kazaks declined to comment on that pricing, saying forward guidance under high uncertainty is "counterproductive."
This means → he neither denied nor endorsed the market's bet — deliberately preserving policy optionality.
Does the economic backdrop support another hike?
His signal leaned optimistic: eurozone Q2 growth was "quite strong," resilience exceeded expectations, and unemployment stayed low.
Wage growth is gradually slowing, and inflation expectations remain anchored near target.
In plain terms = the economy has not buckled under tightening, and the wage-price spiral has not spun out — giving the ECB room to keep going.
Will there be a split at the September meeting?
Some policymakers are more cautious about growth risks and second-round effects from surging energy costs.
This means → a hawk-dove debate is still live; a September hike is not a foregone conclusion.
Kazaks refused to lay out a clear path, calling forecasts "unwise" when the backdrop can shift rapidly.
Content is for reference only, not financial advice.