ECB’s Vasle: Current Pace of Normalisation is Appropriate and Should Continue

29 September 2022

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Boštjan Vasle on Thursday indicated that he might support an October rate hike of the same magnitude as the previous hike.

In remarks opening a conference of the Bank of Slovenia, which he heads, Vasle said that ‘the high price growth has increasingly spread to other items as well’.

Following the increases in interest rate decided by the ECB at its last two meetings, ‘[w]e expect to raise them further over the next several meetings’, he said. ‘My impression is that [the] current pace is appropriate response to elevated inflation, and we should continue with it through [the] next few meetings.’

Rate hikes do not alone constitute normalisation, he continued. Rather, asset purchase programmes will also need to be ‘modified’, he said.

‘Our response is critical to reduce inflation pressures and to avoid de-anchoring of inflation expectations and a possible wage-price spiral’, he added.