ECB's Radev Warns of Rapidly Rising Inflation Expectations, Urges Swift Rate Action

Dimitar Radev, a member of the European Central Bank (ECB) Governing Council, warned in an exclusive Reuters interview in Sofia that euro zone inflation expectations are at risk of accelerating rapidly. Radev specifically identified the Iran war as a primary driver behind surging energy costs and the broader escalation of inflationary pressures. He stated that the 'balance of risks has shifted in an unfavourable direction,' necessitating a high level of readiness to implement swift interest rate hikes. The policymaker emphasized the urgency of preventing inflation expectations from decoupling from official targets to avoid lasting 'inflation scars' in the markets. These comments reinforce the growing hawkish sentiment within the ECB, as markets already price in potential rate hikes for April and June. This stance is expected to provide support for the Euro against major peers while maintaining upward pressure on European bond yields.