ECB Must Raise Rates Again, Kazimir Says, as Inflation Risks Grow

Direct answer: The European Central Bank will have to raise interest rates again, Slovak central bank chief Peter Kazimir said on November 2, 2026. He warned that markets may be underestimating how much action is needed to stop high inflation from becoming entrenched.

What happened

Kazimir, a member of the ECB Governing Council, spoke on Monday after the ECB held interest rates unchanged last week. Reuters reported his remarks on November 2, 2026.

He said the question is increasingly not whether further action will be needed, but how much more will be required. He added that markets may still underestimate what is required, and that the issue is not one meeting or one move, but the path needed to bring inflation back to target and keep it there.

Kazimir also said last week’s pause was not a finish line, and that the ECB should act before high inflation starts to feel normal.

His comments follow a debate inside the ECB that opened after its October 29 decision to hold the deposit rate at 2.50 percent. Other policymakers have also argued in recent days that a further rise may be needed, as covered in our post on the ECB policymakers opening a debate on a December rate hike.

Financial markets now see between two and three ECB rate hikes over the next year before a slow retreat, according to Reuters. Market-based inflation indicators suggest price growth will stay well above the ECB’s 2 percent target for years to come.

Why it matters for beginners

An interest rate is the price of borrowing money. When a central bank raises rates, borrowing becomes more expensive, which can slow spending and help bring inflation down. When it holds rates, it is waiting to see more evidence.

Kazimir’s point is about expectations. If people and businesses start to expect high prices to continue, they may set higher wages and prices, which can keep inflation high for longer. Central bankers call this a second-round effect, and they try to act before it takes hold.

For beginners, the key point is not to guess the next meeting. The ECB held rates last week because, in its view, second-round effects had not yet taken hold, wage growth was muted, and growth was likely to take a hit from higher longer-term borrowing costs. Kazimir is arguing that the risk has now shifted, and that waiting too long could be costly.

Higher rates can affect mortgages, loans, and savings returns in the eurozone, and they can also move the euro and bond markets. That is why a single speech from one policymaker can matter: it gives a clue about how the debate inside the bank is moving.

What to watch next

Watch the ECB’s December meeting, where policymakers will decide whether to raise rates. Watch whether other Governing Council members back Kazimir’s view or argue for more patience.

Watch eurozone inflation data in the coming weeks. If inflation stays high, the case for a hike grows stronger. If it cools, the case for waiting grows stronger.

Watch market pricing too. If markets start to price in more hikes, borrowing costs in financial markets can rise even before the ECB acts.

FAQ

Who is Peter Kazimir?

He is the governor of Slovakia’s central bank and a member of the ECB Governing Council, the body that sets interest rates for the eurozone. He is often described as a hawkish voice, meaning he tends to favour tighter policy to fight inflation.

Did the ECB raise rates on November 2?

No. Kazimir gave his view in a speech and remarks reported on November 2. The ECB’s last decision was to hold rates unchanged, with the deposit rate at 2.50 percent.

How many hikes do markets expect?

Reuters reported that financial markets now see between two and three rate hikes from the ECB over the next year before a slow retreat. That is a market expectation, not a promise by the ECB.

Why does entrenched inflation matter?

If high inflation lasts long enough that people expect it to continue, it becomes harder to bring down. Wage and price decisions start to build in higher inflation, which can keep prices rising even after the original cause fades.

What should a beginner take from this?

Use it as an example of how central bank communication works. Policymakers speak between meetings to signal how they see the risks, and markets listen closely, but the actual decision is taken by the whole Governing Council at a meeting.