By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Peter Kažimír said Monday that the latest evidence would have to be compelling to keep him from supporting a further interest rate increase at the ECB’s next monetary policy meeting.

“A lot can happen in the weeks to come,” Kažimír, who heads the Slovak central bank, said in a blog post on the institution’s website. “Incoming data and geopolitical developments would need to be very convincing to do for me not to advocate another hike in September.”

“We didn’t surprise the markets now, we shouldn’t surprise them in September,” he added.

“It was the right call – and a measured decision – to keep rates unchanged in July. But let me be equally clear: the job is likely not done,” he said.

Risks to both headline and core inflation remained tilted to the upside, Kažimír said, while the renewed escalation of the conflict showed that adverse scenarios could not be dismissed. With no clear end to the conflict, uncertainty surrounding energy supplies from the Gulf also remained unresolved.

“The full inflationary impact of the energy shock has yet to play out. The shock is still unfolding. And the damage done so far is still travelling through the economy — through costs, through margins, and through short-term expectations.”

The ECB’s primary focus remained on persistent indirect effects and the possible emergence of second-round effects, which Kažimír said often developed quietly and became costly to reverse once fully visible.

“Our task is to act before that point, not after,” he said.

“That is why I remain of the view that at least one more hike will be needed as part of our measured adjustment to inflation risks. This is warranted even if the situation improves somewhat.”

Should the situation escalate and price pressures become stronger and more persistent, the ECB would need to tighten more over the coming quarters than currently expected, he said.

“The July pause is, therefore, a waypoint, not a destination," he said. "We are data-dependent and will continue to make decisions meeting by meeting.”

“We are circumspect but not complacent," Kažimír said. "We will take measured, appropriate steps — as many as needed — to deliver on our price stability mandate.”