By Marta Vilar – WASHINGTON (Econostream) – European Central Bank Governing Council member Mārtiņš Kazāks said on Thursday that market expectations of two rate hikes in 2026 were “reasonable,” adding that a 25bp move would largely serve as a signaling step.
Kazāks, who heads the Latvijas Banka, told Reuters that “[e]very meeting is a live meeting and there is two weeks still until April 30,” adding that “quite a lot” could happen by then and it was “not appropriate to provide calendar-based forward guidance.”
He said there was no evidence so far of significant second-round effects, though they could not be ruled out going forward, in which case the ECB would have “to be ready to act.”
Market expectations of two hikes in 2026 were “reasonable,” he said, noting that a move by 25bp “wouldn’t do much more than signaling.”
“Given the recent experience with inflation, firms may respond more quickly in adjusting pricing, and workers are likely to be quicker in demanding wage adjustments,” he said. “This could make the whole inflation cycle ignite quicker.”
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