ECB may need to raise rates for longer than anticipated
The European Central Bank may need to raise interest rates for longer than currently anticipated, and September could be the earliest moment when policymakers can judge whether past rate hikes have been effective, ECB policymaker Peter Kazimir said on Tuesday.
The ECB has lifted rates at each of its past seven meetings to fight a historic surge in consumer prices and policymakers have signalled further hikes to come as inflation pressures continue to build.
But the bank slowed the pace of hikes to 25 basis points last week, the smallest increment since tightening started last July, arguing that past measures are still working their way through the economy and overall inflation was past its peak.
“Based on today’s data, we will have to keep raising interest rates for longer than anticipated,” Kazimir, Slovakia’s central bank chief, said in a blog post. “So, slowing down the pace to 25 bps is a step that will allow us to go gradually higher for longer, should that be necessary and warranted by incoming data.”
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