What is ECB Governing Council member Ulo Kaasik's view on the need for another interest rate hike, and what justification does he provide?

Ulo Kaasik stated that 'at the moment, it seems reasonable to me to have at least one more [rate hike]' and emphasized that such tightening is needed 'to make sure inflation will come down to 2%' in light of 'the kind of oil shock that we had'. He linked the rationale directly to geopolitical developments—specifically the Iran war and its aftermath—including the resulting energy-price volatility and uncertain supply-chain recovery, noting that 'some of the infrastructure got hit, some of the supply lines are not yet back, so there’s probably a longer-term effect'.

According to Kaasik, what is the main inflation-related risk he is most concerned about beyond near-term commodity shocks?

Kaasik identified wage growth as the primary risk, saying: 'That’s the risk I’m most afraid of'—referring to whether rising euro-zone inflation leads to higher wages that could 'entrench such price pressures for longer'. He added that clarity on this issue may only emerge by autumn, but warned that 'it may not be the only shock we are facing', underscoring ongoing uncertainty around both geopolitics and second-round effects.

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ECB’s Kaasik Says One More Rate Hike Is Reasonable Expectation

Jul 1, 2026

ECB member Ulo Kaasik suggested another rate hike is needed to curb inflation caused by oil shocks and geopolitical instability. Policymakers are watching commodity market volatility and its long-term impact on euro-zone prices.

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