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(Bloomberg) -- Investor bets on additional European Central Bank increases in borrowing costs are logical given the present situation, according to Governing Council member Ulo Kaasik.“It’s true the markets are expecting the interest-rate hiking cycle to continue, and looking at the current developments it’s understandable why the markets think that,” the Estonian official told Aripaev on Friday.The remarks come less than a day after the ECB delivered a widely anticipated quarter-point rate hike to 2.5%, the second since the start of the Middle East war. Officials expect to raise borrowing costs further to contain inflation that’s hovering around 3%, with another increase possible as soon as next month, Bloomberg reported on Thursday.With oil back above $100 a barrel, investors are now pricing in three more hikes.“I would certainly not consider the current level very high yet,” Kaasik said. “Rather it’s a level that should not yet perhaps directly tighten economic activity too much.”Speaking separately, his Lithuanian counterpart Gediminas Simkus stressed that consumer-price growth is too strong.“Inflation is too high both in the euro zone and in Lithuania,” he told national broadcaster LRT on Friday. “Given that the decision was made only yesterday, I will certainly refrain from speculating on what the ECB’s future decisions might be,” Simkus said. Thursday’s rate increase “isn’t a decision aimed at the future,” Simkus said. “Recent events have taught us to be truly responsible when communicating about what future decisions might entail.”Before this week’s Governing Council meeting, Simkus had said that the anticipated increase wouldn’t be sufficient to bring consumer-price growth down to the 2% target over the medium term. “The primary reason for this rise in inflation is energy — to varying degrees in the euro zone and Lithuania, certainly, but energy nonetheless,” Simkus said on Friday. “And what matters isn’t just the current rate of inflation, but also how long it might remain at such a high level.”More stories like this are available on bloomberg.com©2026 Bloomberg L.P.
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