Makhlouf stated that, as things stand, rates will have to go up again in March, but policy makers should “wait and see exactly what the data tells us.” Nagel claimed that the ECB had already committed to raising rates again in the next two months.
Projections for the second quarter
They both agreed that it is increases unlikely to stop there. “Taking into account that inflation is very high and that core inflation has risen slightly, it wouldn’t be surprising if we kept raising interest rates beyond the first quarter,” said makhloufGovernor of the Irish central bank, to lawmakers in Dublin.
For his part, the president of the German Bundesbank, Joachim Nageltold Spiegel magazine that “I wouldn’t be surprised if we had to keep raising rates even after the two announced measures”.
A third person in charge of monetary policy, the Slovenian bostjan vaslejoined his Dutch and Slovak counterparts and asked explicitly a rate hike of 50 basis points in March. The President of the ECB, Christine Lagarde, also seemed to support this increase this week.
Others, like the heads of the Greek and Italian central banks, called for more caution and gradual measures. That sent markets oscillating between 25 and 50 basis point hikes as policymakers wrangle publicly over the rate outlook.
Although in the euro zone inflation slowed to 9.2% annualized in December, and starting from the 10.1% of the previous monthMakhlouf stated that is still “too high”. “Interest rates will have to rise significantly at a constant rate to reach sufficiently restrictive levels to guarantee a timely return of inflation to our 2% target in the medium term,” he said.
Source: Ambito
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