ECB’s Vasle Says Rates to Rise 50BP in March, Stay at Restrictive Levels

3 February 2023

By Xavier D’Arcy – FRANKFURT (Econostream) – European Central Bank Governing Council member Boštjan Vasle said on Friday that he expects key interest rates to rise again by 50bp in March and remain in restrictive territory to ensure inflation falls back to the ECB's 2% target.

‘We expect to raise rates again by 50bp at the next Governing Council meeting in March’, Vasle said in a statement posted to the website of Banka Slovenije, which he heads.

‘Interest rates at restrictive levels will eventually reduce inflation by dampening demand and reducing the risks of strengthening inflation expectations’, he added.

However, the Governing Council ‘will continue to adjust further monetary policy decisions to the circumstances and expectations at the time’, he said.

In his statement, Vasle did not offer guidance on the possible path of interest rates following the March meeting.

The improved outlook for the euro area economy had an influence on the ECB’s latest rate hikes, which were ‘based on data showing that growth in economic activity in the euro area is moderating, but remains more robust than previously expected’, he said.

He flagged the ‘persistence of broad-based inflationary pressures’ as evidenced by core inflation.