Martins Kazaks told Econostream that "the story of inflation being way above target is still there." He added, "If this story continues, then some more policy tightening might be necessary. But one has to be cautious because of opposing forces."
Those opposing forces include a recent rise in bond yields, which Kazaks highlighted directly. He said, "There is some extra tightening from markets," and warned that this market-driven tightening "will slow economic growth, which might curb some of the inflationary pressures."
When policy talk makes the day feel uncertain, get a clear five minute overview with the free Market Briefs
Kazaks framed Europe's economy and labor market as not strong enough to push wage demands much higher, saying they are "not that strong for wage demands to be pushed again to new heights." That view underpins his cautious tone about further rate moves even as inflation remains high.
The ECB's next decision on borrowing costs is scheduled for Oct. 29. Investors are overwhelmingly predicting that policymakers will leave the deposit rate at 2.5% at that meeting.
To follow inflation and rate signals without the noise, sign up for our free Market Briefs newsletter today
