European Central Bank Governing Council member and Slovak central bank governor Peter Kazimir stated that the ECB would not hesitate to raise interest rates further if necessary, although determining the next move requires time. In a column published on the Slovak central bank's website on Monday, Kazimir remarked, "We will make every decision when needed, and we will not waver when the evidence demands action." However, he emphasized that policymakers must first assess whether the indirect impacts of the war-induced surge in energy costs are unfolding as anticipated, and whether "demand and labor market conditions are robust enough to generate second-round effects."

The ECB raised borrowing costs by 25 basis points to 2.5% last week, marking its second hike since the outbreak of the Iran war, as rising oil prices exacerbated inflationary pressures. While the ECB reiterated that it would not pre-commit to future policy moves, upward revisions to inflation expectations and signs of resilience in eurozone growth have fueled market expectations for further tightening. Traders are currently pricing in three additional rate hikes by October 2027.

Kazimir noted on Monday that markets are "very clear" about how the ECB responds to incoming information, which "creates valuable space for careful observation and judgment." He added, "This allows us to act when necessary." After last week's hike, he underscored the ECB's flexibility, stating, "We should not confuse openness about the next decision with hesitation."

Inflation remains a "thorn in the side," and expectations for further ECB rate hikes are mounting. Kazimir believes that inflation risks are "clearly tilted to the upside," and while stronger-than-expected growth is also driving price increases, energy remains the primary source of risk. He added that he is increasingly focused on natural gas and electricity. "The longer high energy costs persist, the greater the risk they seep into long-term expectations, wages, and prices," Kazimir said.

Lithuanian central bank governor and ECB Governing Council member Gediminas Simkus stated that December might be a natural time to reassess the eurozone economy, but energy prices must be closely monitored ahead of next month's meeting. He commented, "As early as October, we can assess the inflation outlook and determine whether it is deteriorating or improving. I cannot rule out any specific meeting. We will decide based on incoming data."

ECB President Christine Lagarde recently noted that eurozone inflation will remain elevated for some time. "The current shock is lasting longer," she said, adding that the Middle East conflict "is ongoing. We expect volatility and pressure in energy prices to persist, although higher prices also carry risks of slowing economic growth."

Bundesbank President and ECB Governing Council member Joachim Nagel stated on Friday that the ECB may need to tighten borrowing costs to a slightly restrictive level to control price pressures. After last Thursday's hike, the deposit rate stands at 2.5%, a level many, including Chief Economist Philip Lane, view as near the upper end of the neutral range.

Traders have increased bets on an ECB rate hike in October, now seeing a likelihood as high as 70%, up from just over 50% previously. Jefferies economist Modupe Adegbembo commented, "We still lean toward a rate hike in December, but it could come as early as October if energy prices remain persistently high."