ECB’s Kažimír: March Hike Won’t Be Last, But Depending on Forecasts, Can Start in June to Talk of Success
3 February 2023
By David Barwick – FRANKFURT (Econostream) – The European Central Bank will have to continue to hike interest rates beyond March, but might be able to start considering its efforts as having borne fruit if the March and June forecasts cooperate, Governing Council member Peter Kažimír said Friday.
In a statement issued on the website of the National Bank of Slovakia, which he heads, Kažimír said that the need to hike rates at yesterday’s monetary policy meeting of the Council was ‘quite simple’, given that ‘we are still very, very far from the target.’
‘We cannot afford to slack off, and based on the data available today, I see no reason to do so’, he said. ‘At the same time, I fear that core inflation may stubbornly remain at too high levels, and that is unacceptable. The moment people and businesses get used to high inflation and it translates into expectations, we have a fundamental problem.’
Monetary authorities ‘intend’ to hike by another 50bp next month, which ‘will be a moment for me to start talking about what to do next’, he said. ‘Assuming that the March and subsequently June estimates show a drop in inflation towards the target, we can begin to cautiously say that we are managing to tame the inflationary beast.’
The March rate hike ‘will not be the last’, but the number of hikes still needed won’t be decided until thereafter, he said. Once interest rates do peak, ‘[w]e will stay there until we are sure that we can start the descent with a clear conscience’, he said.
‘The fight against inflation is far from won and it will take months before we can say with certainty that we have steered inflation where it belongs’, he added.