With inflation looming and oil prices surpassing $100, the balance for ECB rate hikes has clearly shifted

⑴ European Central Bank Governor Simkus has released a clear hawkish signal, pointing out that inflation risks are clearly tilted to the upside. While the current environment is favorable for controlling inflation, prices themselves are expected to remain above target for an extended period. ⑵ He specifically mentioned that Brent crude oil has once again touched the $100-per-barrel mark, and this change will directly feed into the inflation environment, further intensifying price pressures and forcing policymakers to respond with appropriate measures. ⑶ Simkus emphasized that the primary challenge now lies in the high level of uncertainty. Against this backdrop, the European Central Bank is more inclined to opt for further rate hikes rather than keeping rates unchanged, expressing a firmer stance than before. ⑷ Although no clear second-round spillover effects have been observed, the potential risk of oil prices rising combined with wage growth is keeping the governor highly alert to the persistence of inflation, and the market's expectations for a rate hike in September have subsequently increased. ⑸ Overall, hawkish voices within the European Central Bank continue to strengthen. If subsequent data confirms that inflation is slowing at a rate below expectations, consecutive rate hikes are likely, providing short-term support for the euro but simultaneously fueling concerns about economic downturn.