ECB won’t raise rates by more than 75bp
2022.12.16 08:16
ECB won’t raise rates by more than 75bp
Budrigannews.com – Mario Centeno, a member of the ECB Governing Council, stated on Friday that the likelihood of the European Central Bank resuming 75 basis point interest rate hikes is now “very low.” He cited the possibility of overreacting to high inflation with excessive tightening.
On Thursday, the European Central Bank (ECB) slowed down the rate at which it raises interest rates, raising its key rate by 50 basis points to 2%. However, it emphasized that significant tightening is still expected.
He stated at a press conference, “Returning to the 75 bp rise is an event with very low probability…because there is a very obvious approximation to the neutral rate, because of the maturity that the monetary policy has already and the need to be cautious going forward.”
Centeno said, referring to the upcoming policy meeting, “There is likely to be another 50 basis point rate hike in February.”
“between 1.75% and 2%, a little above 2% but not much above,” he stated, referring to the range of estimates, suggested a neutral rate.
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He stated that “the decisions will be taken meeting after meeting, dependent on the data available” and that “every rise in interest rates due to having a restrictive effect must make us think a lot…the risk of overreacting is very great.” He also mentioned that the ECB is determined to reduce inflation.
“Predictability of monetary policy will be gained at the time the inflation path reverses,” he said, adding that inflation expectations were still solid.
