European Central Bank Governing Council member Olli Rehn said “there are grounds for significant increases” in the key interest rate in the winter and early spring, reiterating comments he’d made earlier in the week.
(Bloomberg) —
European Central Bank Governing Council member Olli Rehn said “there are grounds for significant increases” in the key interest rate in the winter and early spring, reiterating comments he’d made earlier in the week.
Thereafter the central bank should decide on rates depending on data received at each meeting, Rehn said in an interview on Finland’s MTV on Saturday. The Finnish central bank governor added that the rate increases are intended to help with the eroding purchasing power of euro-area citizens.
ECB President Christine Lagarde and some of her colleagues overseeing monetary policy in the single currency area have been pushing back against suggestions that the pace of interest-rate hikes should be slowed after an expected half-point move next month. While headline inflation has dipped back into single digits, underlying price gains reached a record in December. The economy, meanwhile, is proving robust — despite rising rates.
Governing Council member Klaas Knot said Thursday that there’ll still be more than one half-point increase in borrowing costs. His French colleague, Francois Villeroy de Galhau, has said rates should peak by the summer and then stay at that level for some time.
Markets are putting the terminal rate at about 3.25% and “pricing in a lot” of the tightening, Rehn said, though he declined to assess where the terminal rate will land.
“It’s certain that the rate hikes that we’ve already made and the forward guidance on upcoming hikes have the effect that markets are pricing in a lot of it into the Euribor rates,” he said.
Separately, Rehn said he’s not ruling out running for Finnish president in the early 2024 elections, saying he’s planning to decide during the summer or autumn as parties settle on their candidates. President Sauli Niinisto is not eligible to run for a third term.
(Updates with further comments from Rehn from fifth paragraph)
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