Ecb's next vp says wait-and-see is over on rates
Boris Vujcic is not mincing words. The incoming ECB Vice President, who takes office in June, has made clear that the era of cautious hand-wringing is finished. With consumer prices projected to hit 2.6% this year under the bank's latest forecasts — and a gut-punch scenario of 6.3% if oil and gas flows through the Strait of Hormuz stay disrupted — Vujcic's message to Frankfurt is blunt: move now, or move harder later.
Two options, one obvious answer
The way Vujcic frames it, the ECB doesn't have a menu of choices. It has two: begin gradual, measured rate hikes immediately, or delay and absorb the cost of a much larger adjustment down the road. He's firmly in the first camp. Smaller, earlier moves buy time and flexibility — the ability to course-correct if the geopolitical picture shifts. Waiting, by contrast, just lets the pressure build.
That logic isn't controversial among economists. By last week, the consensus had already hardened around the idea that monetary tightening is coming, with the first of two expected adjustments landing in either April or June. Markets are pricing in up to three quarter-point increases to the deposit rate this year, lifting it from its current 2% floor.
Nagel adds his voice, and the euribor is already moving
Bundesbank President Joachim Nagel is aligned. He said publicly that the ECB will need to seriously consider raising borrowing costs at next month's meeting, pointing specifically to soaring energy prices bleeding into broader inflation. The Euribor, meanwhile, has already posted its sharpest climb since 2008 — the bond market isn't waiting for the press conference.
Vujcic is also pushing back on the idea that one or two hikes would kneecap growth. His read: the Economy is already taking damage from prolonged conflict and supply uncertainty. A modest tightening cycle doesn't add much pain on top of that. What it does do is anchor expectations before inflation becomes self-reinforcing.
Why this time is different from 2022
The comparison to the post-Ukraine energy shock keeps coming up, and Vujcic acknowledges it directly. In 2022, euro-area inflation peaked at a record 10.6%. He argues the ECB won't let that happen again — not because the external pressures are lighter, but because the institution has internalized a hard lesson: supply-side shocks that drag on long enough stop being supply-side problems. They become a monetary policy problem. Sitting on your hands while waiting for a geopolitical resolution is exactly the mistake the ECB made then.
His position on the dual mandate is equally unambiguous. When inflation and growth are both under threat simultaneously, Vujcic says price stability takes precedence — meaning the ECB's target of below 2% CPI isn't negotiable, even in exceptional circumstances. That's a hawkish reading of the mandate, and it signals where the institution's center of gravity is heading once he's in the building.
The Strait of Hormuz may or may not reopen. Frankfurt's next move, increasingly, will not wait to find out.