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European Central Bank (ECB) Governing Council member and Governor of the National Bank of Slovakia (NBS), Peter Kazimir, seems to be leaning towards a hawkish monetary policy outlook. In European trade, Kazimir signaled the need FOR an interest rate hike to ease accelerating risks of second-round inflation effects.
Remarks
At least one more interest rate hike will be needed.
Second-round effects costly to reverse, ECB must act before they are visible.
Deterioration of outlook would warrant more tightening than now expected.
Rate hike will be warranted even if inflation situation improves somewhat.
Market reaction
The Euro (EUR) has not reacted immediately to ECB Kazimir’s comments, but has surrendered some of its early gains due to a recovery move in the US Dollar (USD). At press time, EUR/USD trades 0.22% higher to near 1.1395.
