ECB to Hike If Oil Deanchors Inflation Expectations, Kazaks Says

Martins Kazaks Photographer: Andrey Rudakov/Bloomberg

By Aaron Eglitis May 14, 2026 at 05:22 AM GMT+8

The European Central Bank will need to raise borrowing costs if an increase in crude prices feeds through to inflation expectations, according to Governing Council member Martins Kazaks.

“Oil prices are higher, we see that it’s gradually starting to push inflation up, and if inflation expectations start to deteriorate, then the ECB will be forced to raise interest rates,” the Latvian central bank chief told public broadcaster LTV on Thursday.

Markets and economists are counting on a 25-basis point rate hike at the ECB’s June meeting. While some officials signaled they have seen enough in data to support such a move, others have said the outlook needs to weaken further for them to act.

“At the moment the financial markets are pricing an increase — I can’t confirm or deny,” Kazaks said. “We’ll see if that situation comes. But if we look at the scenario analysis and at our forecasts then the situation is a bit worse than it was initially forecast in the base case.”

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