ECB has 'luxury' to wait on interest rate rises, says top policymaker
Source · Monetary Policy desk
— Summary
Mārtiņš Kazāks, governor of the Bank of Latvia and a member of the ECB's governing council, told the Financial Times that the European Central Bank has the "luxury" of not needing to rush to raise interest rates from their current 2% level, despite Middle East tensions. He spoke a week ahead of the ECB's April 30 rate-setting meeting, stressing that inflation expectations remain contained and that higher energy prices have so far produced limited knock-on effects on the rest of the economy.
Kazāks argued that the "tough decisions we made in the past" to tackle the 2022 inflation surge gave today's ECB room to move deliberately, though "we will of course move if we see it is necessary". Investors are currently pricing in two quarter-point rate rises by the end of the year, taking the benchmark rate to 2.5%, according to Reuters data. They ascribe only a 15% chance to an April 30 hike.
Oil prices have retreated from their post-Iran-war peak and European gas prices are nowhere near 2022 levels. Kazāks warned that "many of the wounds are still very fresh" from the war and "every week brings something new", justifying patience over pre-emption. Source: Financial Times, 22 April 2026, Olaf Storbeck.
The story in one line. The ECB’s Kazāks pushes back against pressure to hike next week — oil is off its peak, inflation expectations are anchored, and the governing council wants more data before it moves.
Key numbers
2% current ECB deposit rate
2.5% expected rate by year-end (two quarter-point hikes priced in)
15% market-implied probability of a hike at the April 30 meeting
European gas prices far below 2022 levels; oil off post-war peak
Middle East war now lasting nearly two months
Why it matters
Kazāks is effectively telling the market not to front-run the ECB. If the council really does have the “luxury” of waiting, the natural path is to monitor through the summer and move only if second-round effects start to show. That is a slower tightening cycle than the Fed is signalling, and widens the transatlantic policy gap — which in turn matters for the euro and for European yields.
Takeaway
The ECB is drawing a distinction between the Iran-era oil shock and the 2022 inflation surge. Kazāks’s framing — patience, not urgency — is the clearest read yet of the council’s April 30 bias. Markets pricing two hikes by year-end might be a quarter-point too hot.
Source: Financial Times, 22 April 2026, Olaf Storbeck.