ECB’s Vasle: Must Continue Normalising Monetary Policy; Rates to Become Restrictive

21 November 2022

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Boštjan Vasle on Monday said that the ECB had to keep normalising monetary policy and that interest rates would be hiked to the point of being restrictive.

According to remarks posted to the website of the Bank of Slovenia, which he heads, for delivery at a press conference in Ljubljana following the mission of the IMF to Slovenia, Vasle said that ‘to moderate inflation, it will be necessary to continue with the normalisation of monetary policy’.

Interest rates were headed into restrictive territory and the ECB also had at its disposal quantitative tightening, he added.

‘Action by other policies, especially fiscal ones, will also be necessary’, he said.

In Slovenia, an economic slowdown will be visible this year, ‘and even more so next year’, he said. ‘However, I would like to point out that we are still talking about a high overall figure for this year, which will remain positive next year, with the recovery from the coronavirus-related crisis being among the fastest in the Eurozone.’

Slovenian inflation will be high this and next year, he said. ‘Our baseline scenario is that it will peak in the coming months and then moderate significantly by the end of next year, approaching our target of 2% in 2024.’