ECB’s Wunsch: Deposit Rate of 1.5% a ‘No-Brainer’ as Long as No Severe Recession
26 July 2022
By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Pierre Wunsch on Tuesday said that the ECB should get the deposit rate to 1.5% if no severe recession occurred.
In an interview with the New York Times, Wunsch, who heads the Belgian National Bank, called hiking to 1.5% a ‘no-brainer’, absent a ‘deep recession’.
Policymakers are in a ‘very difficult situation’, he was quoted as saying, with the economy ‘slowing down and inflation continuing to surprise on the upside’.
‘Every week there is something that signals that we are not at the end of these dynamics and we are getting ever closer to something that looks like some form of stagflation’, he said.
The looming stagflationary episode was ‘not the one that we observed in the ’70s and ’80s, but we cannot claim that it’s completely different’, he said.
According to the paper, Wunsch expressed a preference for hiking in 50bp increments, possibly decelerating closer to 1.5%.