A growing chorus of European Central Bank officials predicts that interest-rate increases will soon come to an end — signaling a new-found consensus after tensions began to bubble up at their last policy meeting.
(Bloomberg) — A growing chorus of European Central Bank officials predicts that interest-rate increases will soon come to an end — signaling a new-found consensus after tensions began to bubble up at their last policy meeting.
France’s Francois Villeroy de Galhau kicked things off on Friday, saying the ECB has completed most of the monetary tightening needed to get inflation back under control. Since then, his Governing Council colleagues from Greece, Lithuania and Croatia have sung a similar tune.
Francois Villeroy de Galhau
“Although we have completed most of our rate-hiking journey, we may possibly still have a little way to go.” (March 31)
Yannis Stournaras
“Especially after the latest events I feel now that we are close to the end. I can’t say we’re at the end, that it’s over, but we’re definitely close to the end.” (April 2)
Gediminas Simkus
“I believe we’ve covered the larger part of the path of the interest-rate increases, but we’re not there yet.” (April 3)
Boris Vujcic
“The biggest part of the cycle of rate rises is behind us.” (April 5)
While President Christine Lagarde hasn’t faced major disagreements among rate-setters since the ECB started raising rates last July, views had started to diverge over how much more action is needed to return inflation to 2%. By her count, three or four officials didn’t support March’s hike in the deposit rate to 3%.
That group, she argued, would have preferred to wait for financial markets to calm after the recent banking turmoil. Executive Board member Isabel Schnabel, meanwhile, lost a fight to signal future rate moves in the policy statement.
The latest remarks suggest traders betting on about two more quarter-point hikes may be close to what policymakers have in mind. Even top hawk Robert Holzmann, who’d previously backed a peak rate of 4.5%, now appears to be leaning toward doing less.
–With assistance from James Hirai.
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