European Central Bank Governing Council member Madis Muller said he wouldn’t like to predict upcoming interest-rate decisions as recent problems with Silicon Valley Bank and Credit Suisse have raised uncertainty.
(Bloomberg) — European Central Bank Governing Council member Madis Muller said he wouldn’t like to predict upcoming interest-rate decisions as recent problems with Silicon Valley Bank and Credit Suisse have raised uncertainty.
Euro-area banks haven’t taken the same kind of risks as SVB and there have been problems for years at Credit Suisse, the hawkish Estonian central bank chief said Friday.
But the situation has nevertheless made communication more difficult, according to Muller, who’s in the past offered his opinion on future rate announcements.
“I wouldn’t want make predictions in a situation where it’s not known what the economic indicators are for the coming months and what else could happen in the meantime,” he told Estonian radio, a day after the ECB made good on a promise to hike rates by a half-point.
“The financial markets expect interest rates to continue to rise, so in order to reduce inflation to the numbers that are in this forecast, there’s a presumption that interest rates still need to rise,” Muller said.
In a statement published later on the central bank’s website, Muller said inflation is still too fast, meaning further increases in borrowing costs may well be needed.
Underlying price growth “shows no sign of slowing yet,” Muller said. “It’s still too early for the central bank to conclude that the backbone of rapid inflation has been broken and interest-rate hikes can be stopped.”
Muller also said:
- No sign yet that persistent inflation pressures are easing
- Must tackle inflation that remains too high
- There’s no need to worry about Estonian banks
–With assistance from Niraj Shah (Economist) and Alexander Weber.
(Updates with comments from Muller’s blog post in sixth paragraph.)
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