They Said It About ECB Policy Tightening - Recent Comments of Governing Council Members

27 January 2023

By David Barwick – FRANKFURT (Econostream) – The following is a compendium of comments made by European Central Bank Governing Council members related to the appropriate pace of upcoming ECB monetary policy tightening. We include only comments made since the December 15 Council meeting.


Christine Lagarde (ECB)
23 January 2023

‘…we have made it clear that ECB interest rates will still have to rise significantly at a steady pace to reach levels that are sufficiently restrictive, and stay at those levels for as long as necessary.’

15 December 2022

‘…we judge that interest rates will still have to rise significantly at a steady pace to reach levels that are sufficiently restrictive to ensure a timely return of inflation to our 2% medium-term target.’

‘It is pretty much obvious that, on the basis of the data that we have at the moment, significant rise at a steady pace means that we should expect to raise interest rates at a 50-basis-point pace for a period of time.’

‘Based on the information that we have available today, that predicates another 50-basis-point rate hike at our next meeting, and possibly at the one after that, and possibly thereafter, but everything will also be determined by the review of data. So don’t assume that it’s a one-shot 50; it’s more than that. I don’t know how many more times. So it shouldn’t be regarded as the new normal, but in the current circumstances, we believe that this the right approach on a steady-pace basis.’


Isabel Schnabel (ECB)
10 January 2023

‘We judge that interest rates will still have to rise significantly at a steady pace to reach levels that are sufficiently restrictive to ensure a timely return of inflation to our 2% medium-term target.’


Philip Lane (ECB)
17 January 2023

‘…now we have the policy rate at around 2%, which is in the “ballpark” of neutral. Yet we are still not where the risks become more two-sided or symmetric. So, we need to raise rates more. Once we’ve made further progress, the risks will be more two-sided, where will have to balance the risks of doing too much versus doing too little. This is not just an issue about the next meeting or the next couple of meetings, it’s going to be an issue for the next year or two. It’s important to remember that we meet every six weeks. We will have to make sure we take a data-dependent, meeting-by-meeting approach, to make sure we adjust to the evolution of the two risks. What does that mean? We have to keep an open mind on the appropriate level of interest rates. The big error would be maintaining a misdiagnosis for too long. The risk is not what happens in one meeting or in two meetings. What happened in the 1970s was a misdiagnosis over a long period of time. The issue here is flexibility in both directions to make sure that policy is adjusted in a timely manner, rather than maintaining a fixed view of the world for too long.’

6 January 2023

‘…we judge that interest rates will still have to rise significantly at a steady pace to reach levels that are sufficiently restrictive to ensure a timely return of inflation to our two per cent medium-term target.’


Luis de Guindos (ECB)
27 December 2022

‘…we will decide meeting by meeting and on the basis of incoming data, given the current high uncertainty. As we announced this month, there will be further, necessary, rate hikes until inflation is on a path back to close to our 2% target.’

22 December 2022

‘First, increases of 50 basis points may become the new norm in the near term. Second, we should expect to raise interest rates at this pace for a period of time. And third, our interest rates will then enter into restrictive territory.’


Fabio Panetta (ECB)
24 January 2023

‘It was reasonable to increase rates in December and signal a similar step in February. But beyond February any unconditional guidance – that is, guidance unrelated to the economic outlook – would depart from our data-driven approach. Our December decisions were based on the projections available at that time. In March we will have new ones and should reassess the situation.’

‘…recent developments suggest that we can fend off the risks of second-round effects and bring down inflation by continuing to adjust our policy rates in a well-calibrated, non-mechanical way.’

‘Monetary policy operates with lags, which means that the effects of the fastest tightening in the ECB’s history have not even started to be fully felt. We need to take those lags into account to avoid having to reverse course, which would be costly given the lower flexibility of the euro area economy compared to economies like the US. We need to keep our policy dependent on incoming information, providing markets with the necessary conditional guidance on the basis of our reaction function. We should do all that is necessary to bring inflation down to 2% without undue delay, at the minimum cost to the economy.’

‘…a detailed, public discussion of actual policy measures – a discussion of basis points – would be inappropriate. That discussion should take place within the Governing Council of the ECB.’


Joachim Nagel (Bundesbank)
25 January 2023

‘…nor do I see any reason to change anything about the course outlined by ECB President Christine Lagarde. After all, we are still a long way from the targeted 2% inflation.’

‘This [inflation] outlook is another reason why our announcement at the December Governing Council meeting remains correct: interest rates have yet to rise.’

‘For February and March we have announced that we will raise interest rates sharply again. Then we will look at where the inflation rate is in the spring and what the forecast of our experts will look like then. I wouldn't be surprised if we have to keep raising interest rates even after the two steps that have been announced.’

24 January 2023

‘We need to rein in inflation. Our work is not done yet.’

2 January 2023

‘…our job is not done yet. We need to take further action.’

‘Acting too hesitantly now for fear of choking off economic activity would be the wrong course of action.’

20 December 2022

‘[The December 15 decision] was a robust interest rate step. And it wasn’t the last. As things stand today, further robust steps need to follow.’

16 December 2022

‘With regard to the euro area as a whole, we must not let up our monetary policy efforts towards bringing inflation back down to our target of 2%.’


François Villeroy de Galhau (Banque de France)
23 January 2023

‘We have started to raise interest rates, we will continue to do so, perhaps at a slightly slower pace than in recent months, but we will do so to the level necessary to keep inflation under control.’

17 January 2023

‘I would say that the good resistance of the economy today gives us the means to raise interest rates in a pragmatic and reasonable way … we raised them very rapidly during the second half of 2022, because it was necessary to get out of this very accommodating phase … today we will raise them without a doubt in a more pragmatic way.’

13 January 2023

‘We need to raise rates. Today, central bank rates are at 2%, which is considered to be about the equilibrium rate that does not stimulate inflation and does not slow it down. We probably have to go a bit further in the coming months.’

11 January 2023

‘…we have reached the “normalisation zone”, in which monetary policy neither stimulates nor restrains inflation. In 2023, further rate hikes will most likely be needed in the coming months, at a pragmatic pace, to bring inflation back to around 2% within the two-year timeframe for monetary policy action.’

5 January 2023

‘…after raising interest rates to close to the “neutral interest rate” of 2% in December, we are now embarking on the second phase towards monetary stabilisation: ideally, it would be good to reach the right “terminal rate” by next summer, but it is still too early to say what that level will be. We need to remain pragmatic and to be guided by observed data, including on core inflation, without getting fixated on overly mechanical rate hikes. We will then be prepared to remain at this terminal rate for as long as necessary: the sprint to raise interest rates in 2022 is now becoming more of a long-distance race, and the duration will count at least as much as the level.’

16 December 2022

‘I believe that we should not already speculate on the number of increases of 50 basis points that there will be... There will probably be several, but we will remain guided by the real data: pragmatism!’


Ignazio Visco (Banca d’Italia)
23 January 2023

‘The Council also announced [in December] that [interest rates] will still have to rise to facilitate the timely return of inflation to the objective of price stability and that future decisions on rates will continue to be taken on the basis of the evolution of inflation and growth prospects.’

‘…monetary policy action can only continue in the direction taken. However, normalisation needs to proceed with the necessary gradualness, bearing in mind that, as I have observed, medium- to long-term inflation expectations are anchored and there are no signs of spirals between prices and wages...’

‘…further rate hikes are in the offing, but careful and conscious assessments of the intensity and timing of their transmission to all euro area economies will continue to be necessary, taking into account the evolution, in both directions, of the factors underlying the inflation dynamics…’

‘Even if the direction of travel can therefore only be the one taken - taking into account the initial conditions and regardless of sterile discussions on the level, natural or neutral, of official rates - the decisions on the pace and overall extent of the normalisation of monetary policy will have to continue to balance two risks. … I am inclined to assign similar weight to both risks; that is, I do not see why a possible error of assessment in one direction or the other should be privileged. In other words, I am not convinced that today it is better to risk restricting too much rather than too little.’

‘‘We are in a field of uncertainty where it is said that we have to make decisions on the basis of the data that become available meeting by meeting. And in some ways, this contradicts a bit. Then some statements that are made [by other Governing Council members], where they say, for the next two meetings [they want to hike by] at least 50bp. I am convinced that we need to improve in terms of communication. This is obvious. But in fact, as you will have seen, the decisions are still taken meeting by meeting so we will see if [rates] will go up by as much as some say they will or not. 50bp then 50bp puts rates at 3% in the short term […] We are not talking about extraordinary movements, what worries me is that we give messages that are too hard and where we basically scare rather than accompany.’


Pablo Hernández de Cos (Banco de España)
22 January 2023

‘…now we have to stay the course.’

‘Interest rates will rise to levels that allow us to ensure that inflation returns to the 2% target in the medium term. What is this level? The current uncertainty is so high that it is not really possible to give precise guidance. But, with the information we have at this time, in order to achieve that objective, we believe that it will be necessary to continue raising interest rates significantly in the coming meetings and that, once reached, we will have to maintain that 'terminal' level for a while. The most important message is that we have not reached the end yet.’

16 January 2023

‘The Governing Council has indicated that it will be necessary to continue raising interest rates significantly in the coming meetings, at a sustained pace, until reaching levels that allow us to ensure that inflation will return to the target.’

‘In any case, I would like to re-emphasise the importance of taking into account the extraordinary uncertainty that we are experiencing. All of this leads us to continue emphasizing that our future interest rate decisions will continue to be data-driven and will follow a meeting-by-meeting approach.’

11 January 2023

‘Looking to the future, the Governing Council expects to continue increasing interest rates significantly in the coming meetings, at a sustained pace, until reaching sufficiently restrictive levels to ensure that inflation returns to the 2% target in the medium term.’

‘In any case, it is crucial to continue stressing the importance of taking into account the extraordinary uncertainty that we are experiencing, which affects both the evolution of geopolitical factors, as well as the economic environment and the evolution of the different supply and demand factors that are conditioning it, as well as their persistence, and even the impact of our measures on the economy in this context. All of this leads us to emphasise, as we have been doing in recent months, that our future interest rate decisions will continue to be data driven and will follow an approach where decisions are taken at each meeting.’


Klaas Knot (De Nederlandsche Bank)
21 January 2023

‘The policy conclusion is that what our President Lagarde said in December is even more valid today. We will still have to raise interest rates significantly and bring them into a sufficiently restrictive territory to ensure a timely return of inflation toward our target.’

‘I entirely agree [that the ECB will hike by 50bp in February]. And not only in February. I think our President has been very clear. We made a step down in December from 75 to 50bp. That will be the pace for a multiple number of meetings. So that means at least the two in February and March.’

‘I do think that we will continue to be in tightening mode until the summer. But at some point, of course, the risks surrounding the inflation outlook will become more balanced. So at this moment, the risk that we have to manage is the risk that we do too little, not too much. But in the course of the year, as we will have covered more ground, the risks will become more balanced as well. … Then we must become more nuanced in our weighing of the risks of doing too little versus the risks of doing too much. That would also be a time in which we could make a further step down from 50 to 25bp, for instance. But we are still far away from that. I want to re-emphasize that this is not in sight for the upcoming meetings.’

19 January 2023

‘The phase of 50bp moves ‘will not stop after a single 50bp hike - that's for sure.' Lagarde 'has used the plural "s" in her words and I am using the plural "s" here.’

‘…at least until mid-year, we will be in tightening mode.’

26 December 2022

With five policy meetings until next July, the ECB would achieve ‘quite a decent pace of tightening’ via 50bp hikes in the months ahead before hitting the terminal rate by summer.


Mārtiņš Kazāks (Latvijas Banka)
13 January 2023

Rates should rise ‘well into restrictive territory.’

3 January 2023

‘In the next two meetings I think we can still do quite large steps. Of course the steps may become smaller as necessary as we find the level appropriate to bring the inflation down to 2%.’

‘Currently I would see that at the February and March meetings we will have significant rate increases.’


Olli Rehn (Bank of Finland)
16 January 2023

‘Policy rates will still have to rise significantly to reach levels that are sufficiently restrictive to ensure a timely return of inflation to the 2% medium-term target. Thus, we will stay the course. Ceteris paribus, this means significant rate hikes in the following meetings – on a meeting-by-meeting basis depending on the incoming data and changes in the outlook. … But the near term is shrouded in uncertainty, and we need to keep an open mind to adjust our policies if needed.’


Madis Müller (Eesti Pank)
16 December 2022

‘We [hiked yesterday] with the understanding that we will have to raise interest rates further in the future and probably higher than the financial markets have expected so far.’


Boštjan Vasle (Banka Slovenije)
25 January 2023

‘…the intent to make a further rise of 50bp in the key interest rates at the next two meetings is an appropriate response to the current inflation trends and expectations.’

16 December 2022

‘…our expectation is that interest rates will have to rise further before hitting a level that is sufficiently restrictive to ensure that inflation returns as quickly as possible to its 2% target over the medium term.’


Yannis Stournaras (Bank of Greece)
22 January 2023

‘It is clear that further increases will follow in the future. The destination for us is clear. We should reach the interest rate that will ensure a timely return of inflation to the 2% target in the medium term. But given the high uncertainty, the ongoing geopolitical and macroeconomic disturbances, and the volatility in markets, it is very difficult to accurately predict the level at which interest rates need to be set. Interest rate increases are determined based on the evolution of the outlook for inflation and the economy from meeting to meeting. In my opinion, the adjustment of interest rates needs to be more gradual, taking into account the slowdown in economic growth in the euro area, and with a view to the smooth transmission of monetary policy to each euro area country.’

12 January 2023

‘The main monetary policy instruments remain the European Central Bank's intervention rates, which are expected to rise further until the recent positive signs of easing inflationary pressures translate into certainty of approaching the 2% target in the medium term.’

30 December 2022

‘The Governing Council of the ECB has stressed that interest rates will still need to rise significantly at a sustained pace in order to be set at levels that are sufficiently restrictive to ensure a timely return of inflation to the medium-term target of 2%.’

25 December 2022

‘Although the central banks' main objective is clear, a policy dilemma arises relating to the extent to which interest rates should be increased and thus the negative consequences for economic growth that monetary authorities will be able to accept in order to stabilise inflation over the medium term.’

22 December 2022

‘The key interest rate of the European Central Bank has risen and we expect it to rise further. …  we will not stop at the 2% that is now. Possibly we will go towards 3%. … The DFR … may go to 3% by March.’

‘There is a danger here that if we raise interest rates to the same extent that America is raising them, we will hit the real economy too hard and create too much unemployment.’


Peter Kažimír (National Bank of Slovakia)
23 January 2023

‘…there is no reason to slow the pace of rate hikes. … I believe we need to "deliver" two more 50s.

‘We're halfway there. If it were up to me, I would go into the summer holidays with the tightening cycle completed. But today, please don't ask me at what "altitude" we will be camping. In other words, how high are we going to go with rates and how long will it take to get there to tame inflation as needed. What the summer will be like is therefore a question for meteorologists today.’

19 December 2022

‘The direction is given and there is general agreement that this direction is necessary to anchor future inflation expectations. The current view of the future development of inflation, which we currently do not see at the target even in 2025, tells us to continue very vigorously, and I fully agree with that. I even think that in order to tame inflation, it will be necessary not only to move into the restrictive zone, but to stay there much longer. How high we will go with the rates is impossible to say today. Time and inflation will tell.’

‘The determination to continue vigorously will have to be maintained for at least the entire next half-year.’


Mario Centeno (Banco de Portugal)
17 January 2023

‘We are in a comfortable [normalization] process [that is] really needed’.


22 December 2022

‘I support all the rate increases that have been made by the ECB so far. … my position is … fully aligned with the decision that was made’ on December 15.

‘Further hikes are an inevitability, and the predictability of monetary policy, which is highly desirable, will become more obvious to everyone once inflation starts to come down.’


Gabriel Makhlouf (Central Bank of Ireland)
25 January 2023

‘We need to continue to increase rates at our meeting next week – by taking a similar step to our December decisions – and also at our March meeting, although our future policy decisions need to continue to be data-dependent given the prevailing uncertainty.’


Gediminas Šimkus (Bank of Lithuania)
24 January 2023

‘There’s a strong case for staying on the course that’s been set for the coming meetings of 50bp increases. In my opinion, these 50bp increases must be taken unequivocally.’

‘It’s clear to me that the current economic environment requires us to deliver increases of 50bp in the coming meetings. When we move to the more distant periods of the summer or next autumn, we need to wait and see.’


Robert Holzmann (Austrian National Bank)
11 January 2023

‘Hopefully with this we are coming now to the neutral rate’, but rates must nonetheless rise ‘significantly further’ so as to become sufficiently restrictive to restore price stability.

‘We are probably around neutral territory’, but ‘we don’t know yet’ where the terminal rate lies.

16 December 2022

‘Yes, it is the firm intention to advance well into the area of restrictive policy if it is necessary. That means that you can set the terminal rate high.’


Boris Vujčić
24 January 2023

‘Obviously we can expect interest rates to go up...we have not reached the end...So, we'll see more interest rate hikes.’

10 January 2023

‘We are in the rate-raising phase and that cycle did not finish with the last hike of 50bp but will continue. Until when will depend on what will be happening with inflation, and on the effect of previous hikes, which will be assessed from one monetary policy meeting to another.’