ECB’s Šimkus: ‘March Is an Intention but Not a Commitment’
3 February 2023
By David Barwick – FRANKFURT (Econostream) – A rate hike of 50bp next month by the European Central Bank is the current plan, but is not a promise, according to ECB Governing Council member Gediminas Šimkus.
In remarks to journalists in Vilnius, Šimkus, who is Chairman of the Board of the Bank of Lithuania, said that ‘March is an intention but not a commitment.’
‘If we are talking about May, we can certainly expect it’, he added in apparent reference to a hike in general.
‘There are some corrections of inflation expectations to the positive side. I think this shows very clearly that we are on the right track. And it is these forecasts that will help us make a decision in March’, he said.
Šimkus said he saw ‘positive trends for inflation’ and suggested that his conclusion was ‘that we are already moving towards that terminal rate.’
‘I think the peak of inflation in the euro area is already in the past’, he said. ‘That estimate will probably be updated, but I think that the dynamics of inflation … are positive.’
Elaborating on Thursday’s 50bp hike by the Governing Council, he said, ‘With this decision, we are entering the territory of a monetary policy that has so far been very mildly restrictive. We used to say that we were somewhere in the middle ground between stimulative and restrictive monetary policy.’