The European Central Bank needs to raise interest rates one more time to make sure inflation returns to 2%, according to Governing Council member Peter Kazimir.
(Bloomberg) — The European Central Bank needs to raise interest rates one more time to make sure inflation returns to 2%, according to Governing Council member Peter Kazimir.
Taking that step next week is preferable to a pause — which is also an option — because price growth remains too strong, the Slovak central bank chief said.
“It is a more straightforward and efficient solution,” Kazimir said in an op-ed sent by email. “Markets receive a clearer indication about the likely terminal rate, and we have more time to evaluate whether inflation is on a sustainable downward path toward our target.”
The comments are among the clearest yet from the Governing Council’s hawkish wing and come just hours before the start of a quiet period preceding the Sept. 13-14 meeting.
Kazimir’s Dutch colleague, Klaas Knot, told Bloomberg earlier that investors betting against an increase next week are “maybe” underestimating the likelihood of it happening.
It’s “better to be safe than sorry,” Kazimir said. “The development of inflation in the euro zone in August confirmed that it is clearly too early to declare victory. Inflation remains stubbornly high and inflation expectations remain too far above our 2% target.”
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