Governing Council member Martins Kazaks warned markets not to take the European Central Bank’s next policy step for granted. While inflation data have kept rate‑rise expectations high, Kazaks said a hike is not inevitable. His comment came as traders priced in another tightening move after the ECB left rates unchanged last month overall.

Analysts interpret Kazaks’s caution as a signal that the ECB could pause to assess recent wage trends and the euro’s recent strength. A pause would give banks breathing room and could temper the rally in European equities that has surged on rate‑hike bets. Investors therefore may recalibrate exposure to short‑duration sovereigns and inflation‑linked assets across the region this year.

Market participants will watch upcoming ECB minutes for clues on whether policymakers favour a data‑driven pause or a continuation of the tightening cycle. A decision against an interest‑rate hike could ease pressure on borrowing costs for corporates, while still keeping the euro stable enough for cross‑border trade. The immediate effect will be a modest repricing of risk premia in European markets.