Inflation scars risk quickly lifting expectations; ECB must be ready to act: policymaker

ECB policymaker Dimitar Radev warned that euro zone inflation expectations may rise faster than before and said the ECB must be ready to raise interest rates swiftly if persistent price pressures appear. The comment signals a hawkish shift that increases the probability of sooner/tighter rate hikes, likely putting upward pressure on bond yields and creating headwinds for risk assets.

Analysis

ECB policymaker Dimitar Radev warned that euro zone inflation expectations may rise faster than before and said the ECB must be ready to raise interest rates swiftly if persistent price pressures appear. The comment signals a hawkish shift that increases the probability of sooner/tighter rate hikes, likely putting upward pressure on bond yields and creating headwinds for risk assets.