Kazimir calls June hike inevitable

The European Central Bank looked close to done. Then the inflation outlook jumped again. On May 4, Governing Council member Peter Kazimir said a June rate hike is “all but inevitable,” and that matters because he said it right after the ECB’s own forecaster survey showed a nastier mix of hotter prices and weaker growth. Basically, the bank is staring at a shock that hurts growth but still pushes inflation up — and that is the awkward version of the problem. ### What changed this week? The immediate trigger was the ECB’s second-quarter Survey of Professional Forecasters, also released May 4. That survey pushed expected 2026 headline inflation up to 2.7% from 1.8% in the prior round, and lifted core inflation for both 2026 and 2027 to 2.2% from 2.0%. At the same time, it cut expected GDP growth to 1.0% for 2026 and 1.3% for 2027. ### Why does that matter so much? Because central banks can live with a temporary growth wobble more easily than with inflation that starts sticking above target. The ECB’s target is 2%. If headline inflation is now seen at 2.7% next year and core sits at 2.2% for two straight years, that tells policymakers the pressure is not just about one oil spike washing through the system. ### Who is Kazimir here? Peter Kazimir is Slovakia’s central bank chief and a voting member of the ECB Governing Council. He is not the whole ECB, obviously, but he is one of the officials who helps shape the rate decision. So when he says a June move is “all but inevitable,” markets hear more than random commentary — they hear a policymaker signaling where the center of gravity may be moving. ### Why are prices being revised up now? The ECB’s survey ties the change mainly to higher energy prices linked to the war in the Middle East. That is the nasty part. Energy shocks do not just hit gasoline or utility bills. They seep into transport, production, and eventually wages and services. anything as harmless. ### Isn’t this just a one-off oil shock? Maybe partly — but the catch is core inflation also moved up. Core strips out energy and food, so when core rises with headline, policymakers worry that the shock is spreading beyond the obvious categories. Think of headline inflation as the splash and core as the water level underneath. A splash can fade fast. A higher water level is harder to ignore. ### So is the ECB panicking? Not really. The same survey kept longer-term inflation expectations anchored at 2.0% for both headline and core in 2030. That is important because it says forecasters still believe the ECB can get inflation back under control over time. But anchored long-term expectations do not remove the need for a near-term response if the next year or two suddenly look worse. ### What does June look like now? It looks a lot more live than it did before this survey and Kazimir’s remarks. Bloomberg’s report framed the June increase as highly likely, while also noting that officials are not locking themselves into a fixed path after that. In plain English — one more hike is becoming easier to justify, but a whole new hiking cycle is not yet the base case. ### Bottom line? This is a classic ECB bind. Growth is weakening, but inflation is re-accelerating enough to make standing still look risky. Kazimir’s comment matters because it turns that tension into a concrete signal: unless the data improve fast before June, the ECB may feel it has to hike anyway.