Next ECB Rate Hike a Choice Between 25BP and 50BP, Wunsch Says

13 April 2023

By Xavier D’Arcy – FRANKFURT (Econostream) – The European Central Bank faces a choice of hiking by either 25bp or 50bp at its next monetary policy meeting in May, Governing Council member Pierre Wunsch said on Thursday.

Wunsch, who heads the National Bank of Belgium, told CNBC that another rise in core inflation could tip the balance towards 50bp.

‘Directionally, we have to do more. How much? We still have one inflation reading before we take this decision in May. But it's going to be between 25 and 50 basis points’, he said.

The decision would hinge on the data releases between now and then, he said: ‘A lot will depend on the [inflation] reading. Of course, if it keeps going up, then of course that will be very bad news.’

‘We have had three months of core readings which were moving in the wrong direction. Another false reading moving in the wrong direction, I think would shift the boat’, he said.

He saw limited impact of financial instability on the Eurozone economy. Recent banking turmoil was, he said, ‘more of an American issue than in Europe. Of course, we had some movements in the market over the last few weeks. But, but essentially, we have a very strong banking system. So we don't believe it's going to have a big impact on the economy.’