The European Central Bank just raised interest rates for the first time since 2023. And one of its newest policymakers is already suggesting that more hikes could be on the way.
Ulo Kaasik, who became Governor of Eesti Pank on June 7 and immediately joined the ECB’s Governing Council, said the central bank may need additional interest rate increases to keep inflation under control. His comments come days after the ECB lifted its benchmark rate by 25 basis points to 2.25% on June 11, a direct response to the inflationary pressures unleashed by the ongoing war in Iran.
The inflation picture is getting worse, not better
Eurozone inflation hit 3.2% in May, up from 3.0% in April and roughly double the sub-2% levels that prevailed before the conflict began.
The culprit is energy prices. The Iran war, which started with US and Israeli strikes on February 28, has disrupted oil supplies in a region that accounts for a significant share of global production.
