ECB’s Kazimir: “We need two more increases of 50 basis points”

The European Central Bank should make two more interest rate hikes, of 50 basis points each, despite slowing inflation, Governing Council member Peter Kazimir said on Monday.

Inflation has slowed sharply in the past two months, from 10.6% in October to 9.2% in December, but price growth is expected to pick up again in early 2023, sooner than expected rapid disinflation throughout the year.

“A descent of the inflation in two consecutive months is good news. But it’s not a reason to slow down the pace of interest rate hikes.“, said kazimir. “I am convinced that we need two more increases of 50 basis points”.

Although the eurozone central bank has been raising rates at the fastest pace in its history, it has so far failed to bring inflation anywhere near its 2% target.

“For me, the most important thing is the underlying inflation trend“, said kazimir.

“We are halfway there. If it were up to me, I would go into summer vacation with the hardening cycle complete. But don’t ask me today how far we’ll go with rates, and how long they’ll need to stay there to tame inflation as needed.”, he added.

The ECB promised at its meeting on December 15 to carry out several more rate hikes, albeit by 50 basis points each, instead of the 75 basis points of September and October.

Analysts say that the political signals of the ECB they no longer seem to convince investors, whether they try to raise their interest rate expectations or lower them.

Source: Reuters