ING Economist Says One ECB Rate Hike Could Be Enough as Core Inflation Signals Remain Muted

The Quick Take

• ING chief economist Marieke Blom says one ECB rate hike could be enough given muted core inflation signals
• ING's view: core inflation, services costs, and wage growth data do not show excessive inflationary pressure
• Markets and economists are divided ahead of the ECB's imminent decision on European interest rates

ING chief economist and global head of research Marieke Blom told Bloomberg Television that a single ECB rate hike could be sufficient given the current inflationary landscape. Blom noted that core inflation, services costs, and wage growth data do not show the kind of broad-based inflationary pressure that would justify a prolonged hiking cycle. The ECB is meeting in proximity to this statement, making Blom's perspective particularly market-relevant as it represents a credible counterpoint to the more hawkish consensus expecting multiple hikes to control European headline inflation driven by energy prices from the Iran conflict.

The ING view has direct implications for European fixed income and equity markets. If the ECB signals one-and-done, the front end of the European yield curve would rally as terminal rate expectations compress, benefiting duration-sensitive assets including investment-grade corporate bonds and rate-sensitive equities like utilities and real estate. A single hike rather than a cycle also provides relief to heavily indebted Southern European sovereigns — Italy, Spain, Greece — whose fiscal positions are sensitive to refinancing costs. The euro may weaken modestly if traders price out additional tightening relative to USD, where the Fed is still expected to remain active.

The key forward signal is the ECB's September statement and whether the governing council's language implies a data-dependent pause or signals additional hikes remain on the table. Eurozone flash CPI readings and ECB staff inflation projections in the upcoming statement are the critical metrics. The macro variable: energy prices remain the dominant uncertainty — if Iran conflict escalation keeps Brent above $100, the ECB's ability to declare mission accomplished after one hike becomes politically difficult regardless of services and wage data, forcing a more hawkish reaction function.

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