Three of its officials are calling for further monetary tightening today ECB, despite turmoil in the financial sector. The comments add a new dimension to the way ECB policymakers are thinking about the way forward amid both global financial turmoil and a widespread inflationary shock.

First, Peter Kazimir, Slovakia’s central banker, said interest rate hikes should continue despite the turmoil in the financial sector, but the pace of hikes may need to be slowed. In the same context, chief economist Philip Lane said in an interview with Zeit that the ECB would need to raise interest rates further if recent tensions in the financial system remain contained.

His Lithuanian colleague, Gediminas Simkus, expressed similar views. “Inflationary trends have not disappeared,” he told reporters in Vilnius. “While we need to remain cautious about forward-looking assessment, I still believe this was not the last rate hike.”

Kazimir: We mustn’t relax

Kazimir warned on Wednesday that there was a “real risk” of banks curbing lending amid the current turmoil, while he clarified that structural inflation will be the key determinant of future decisions.

“I personally think that we should not relax if our basic scenario for the future does not change significantly,” the Slovakian central banker stressed. “We need to continue the increases, but maybe at a slower pace.” As for the next ECB meeting in May, Mr Kazimir noted that it is too early to speculate on its outcome.

“We will decide based on the then current data in early May,” he said, “taking into account the situation in the financial markets, as well as how willing the markets are to finance the banks and provide them with adequate capital.”

Lane: More rate hikes will be needed

Shortly after, Philip Lane said he expected “tensions to ease” and then “more rate hikes will be needed.”

“If the economic pressure we’re going through turns out to be still quite limited, interest rates will have to rise,” he told German weekly Zeit. “However, if the unrest intensifies, then we will have to see what is appropriate to do.”

The ECB raised interest rates by half a point this month, although – faced with a banking crisis in the US and Switzerland – it refrained from giving guidance on its next move. As the unrest subsides, several hawks are beginning to repeat their calls for further tightening.

There is no “instant read” in the eurozone on the turmoil, Lane said. “Basically, we expect these tensions to subside,” he added.

At the same time, he agreed with recent comments by other central bankers that the ECB does not face the possibility of a trade-off between protecting financial stability and controlling inflation.

“If that economic pressure weakens the economy, it will automatically reduce inflationary pressures,” Lane said.