Ecb Kazaks Says He Would Err On Side Of Raising Interest Rates
Date
8/25/2023 8:01:20 PM
(MENAFN- The Peninsula) Bloomberg
European Central bank Governing Council member Martins Kazaks said it's better to err on the side of tighter monetary policy than allow the risk of re-accelerating inflation.
"The risks are now really on both sides - doing too little or doing too much, but I would still err on the side of raising rates,” Kazaks told Bloomberg TV at the federal Reserve's annual conference in Jackson Hole on Friday.
"We can always cut. If, however, we stopped too early, then of course later on it may require much larger interventions.”
He added that even if the central bank paused, it wouldn't mean they couldn't raise rates in the future. Kazaks cited strong core inflation and a healthy labor market with increasing wage gains that still risk pressuring up euro-area inflation.
ECB officials are debating whether to pause their historic monetary-tightening campaign as the economic outlook for the 20-nation euro area sours and underlying price pressures appear to have peaked.
A new inflation report and a fresh round of economic projections are due before they next meet in mid-September.
Bundesbank President Joachim Nagel said Thursday that he thinks it's too early to consider a break with inflation north of 5%, adding that his decision will hinge on fresh data.
Croatian official Boris Vujcic also said more facts are needed to determine whether rates have risen far enough already.
Portuguese central-bank chief Mario Centeno struck a more moderate tone, urging his colleagues to move cautiously as downside risks to the economy are becoming a reality.
Kazaks also said: "Core inflation is still quite elevated without a very clear downward trend. So at the current moment, I would still be in no rush to say that we are done”
"I wouldn't rush anything. Let's look at the data. Let's see what happens. And let's return inflation to the 2% target sooner than the end of 2025, which is currently the end of the forecast horizon”
"But I think that one should not think of very short rate decreases when it happens in the future. I think that will be relatively cautistep by step”
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