ECB’s Kažimír: Thursday’s Hike Start of ‘Series of Similar Steps’; Would Be Happy Never to Use TPI
22 July 2022
By David Barwick – FRANKFURT (Econostream) – Thursday’s hike of the European Central Bank’s key interest rates was the start of a series of similar moves, Governing Council member Peter Kažimír said Friday.
In a statement issued on the website of the National Bank of Slovakia, which he heads, Kažimír said that recent data had ‘convinced many, including myself, of the need to start aggressively’ in hiking interest rates.
The 50bp hike Thursday was ‘the beginning of a series of similar steps that are necessary and indispensable to tame inflationary risks’, he wrote. ‘How much we raise rates in September and at our next meetings will be determined by economic developments in the euro area and beyond.’
The September hike could be 25bp or 50bp, he said.
‘We cannot magically depress the price of petrol, gas, food so that prices do not rise in the coming months, but we can take measures to ensure that, once the insane price pressures caused by war and pandemics have subsided, developments return to normal’, he said. ‘Getting inflation to the desired levels will take time.’
The Transmission Protection Instrument is intended to ‘suppress unwarranted and unsystematic turbulence that poses a serious threat to the uniformity of the effects of what we do’, Kažimír said.
‘I'd be happy to never have to use it, but we'll see’, he said. ‘Much will depend on how seriously and responsibly the governments in Europe take up the solution of the root causes of imbalances and fragmentation. They have the ignition keys in their hands, they must consolidate, invest in sustainable growth, in innovation. Without all this, we have a fundamental problem. The ECB is a strong player and if others join, we will all benefit.’