ECB’s Makhlouf: Could Stop Net Bond Buys in June or a Bit Later, and Hike Rates Thereafter

14 February 2022

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Gabriel Makhlouf on Sunday said that the ‘path of normalisation’ of ECB monetary policy had become clearer and that net asset purchases could end in June or a bit later, with rate hikes only occurring after that.

In an interview with the FT, Makhlouf, who heads the Central Bank of Ireland, was quoted as saying, ‘The idea that we could hike interest rates in June looks very unrealistic to me. I certainly think there’s a bit of difference between the calendar we’re working to and the one some market participants may have in mind.’

‘I’m reasonably confident net asset purchases will end this year’, he said. ‘The question is what is the pace at which my foot sits on the accelerator, and am I talking about June or am I talking about the third quarter.’

Makhlouf sounded doubtful as to the extent of wage pressures. Urging that currently elevated inflation readings be put ‘into a broader context’, he said that recruitment difficulties were the main topic of conversation for businesses.

‘There is a bit of discussion about wage pressures, but not to the extent that I can say I have now got strong evidence of things moving’, he said. ‘I certainly want to see fresh evidence’ of wage pressures.

Inflation is ‘impacting on households and businesses in ways they don’t want, and no one wants’, he said. ‘We also don’t want to kill off the recovery.’