According to the Governor of the Bank of Slovakia, Peter Kazimir, the Governing Council of the European Central Bank (ECB) does not have to lift its foot of the accelerator in its next monetary policy meetings, despite the moderation of inflation in recent months . In addition, Kazimir considers that two increases of more than 50 basis points are necessary. “I think we have to ‘deliver’ two more than 50,” the Slovak central banker declares in an article.
It also defends that the evolution of underlying inflation, which is at all-time highs, confirms the need to continue on the path taken in monetary normalization. “We are halfway there, I see no reason to slow down,” says Kazimir.
The positive value of the fall in inflation for two months in a row, although, he explains, it is not a reason to slow down the rate hike advisor, since the inflation numbers for November and December include the ‘noise’ of specific compensatory measures taken by governments. “If it were up to me, I would go to the summer holidays with the adjustment cycle completed,” adds the Central European bank, although it avoids specifying to what level rates would have to be raised. “Don’t ask me at what ‘altitude’ we will camp,” he adds.
Interest rate hike of 250 points since July
Last week, another of the ECB’s ‘hawks’, the Governor of the Bank of the Netherlands, Klaas Knot, stated that the institution will not be satisfied with a single increase of 50 basis points in interest rates in its next policy meetings. currency “It won’t stop after a single 50 basis point increase, that’s for sure,” Klaas Knot said. “I can’t say in advance where that pace of 50 basis point increases is going to end, but it is very clear that our president has used the plural in her words,” he added.
The ECB raised interest rates by 250 basis points in four consecutive meetings from July 2022, raising its reference rate to 2.50% and the deposit to 2%. After the last monetary policy meeting of the Governing Council, held on December 15, the president of the ECB, Christine Lagarde, anticipated that, based on the available data, the entity should be expected to raise rates “at a rate of 50 basis points over a period of time.”
The inflation rate drops nine tenths in December
The inflation rate in the euro area ended 2022 at 9.2%, which implies a drop of nine tenths compared to 10.1% in November, thus registering its second consecutive relief, after having climbed to all-time highs in October, when it reached 10.6 3% of the reference rate for refinancing operations and 2.50% of the deposit.
