- I see at least one more rate increase
- It’s important to cap inflation expectations
ECB’s Simkus expects the central bank to deliver at least one more rate hike to lean against inflation risks and make sure inflation expectations remain in check.
According to Simkus, there’s still enough upside risk for inflation to justify additional policy tightening amid broadening price pressures. He stressed that capping inflation expectations remains central to ECB’s goal to keep inflation around target over the medium-term.
His comments align with the ECB’s broader view to prevent second-round effects. The market was pricing in two rate hikes for the ECB by year-end but those bets were pared back after the surprising breakthrough in US-Iran negotiations. Traders are now expecting just one last hike.
