ECB's Kazaks: An early 2023 rate hike is a possibility, ECB ready to cut stimulus

Joel Frank Independent Analyst

Latvian central bank governor and ECB governing council member Martins Kazaks said on Wednesday that the ECB is ready to raise rates and cut stimulus if needed. The bank, he continued, is ready to take action if the inflation outlook picks up and an early 2023 rate hike is a possible scenario.

Kazaks said back in December that the ECB is "increasingly likely" to achieve its goal of stable 2% inflation, but needs proof of that happening before further removal of stimulus. At the time, Kazaks said that inflation still needed a boost from wages if it were to stabilise in the 2.0% area. Traders will be on the lookout for any indicators that might give the ECB reason to lift its 2023 inflation forecast above the 2.0% level, including evidence of faster wage growth.

Market Reaction

The euro saw some volatility on Kazaks more hawkish leaning remarks. But the remarks about the potential for an early 2023 rate hike is conditional and the ECB remains data-dependent.

Author

Joel Frank

Independent Analyst

Joel Frank is an economics graduate from the University of Birmingham and has worked as a full-time financial market analyst since 2018, specialising in the coverage of how developments in the global economy impact financial asset

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