ECB’s Kažimír: One More Step Needed, Taking It Next Week the ‘Preferable, Reasonable’ Option

6 September 2023

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Peter Kažimír on Wednesday said that the ECB was not done after yesterday’s 25bp hike and that it should continue with a ‘firm step’ towards price stability.

In a statement issued on the website of the National Bank of Slovakia, which he heads, Kažimír said that it remained unclear whether the ECB would hike rates anew next week, but that the latest inflation data showed it to be ‘clearly too early to declare victory.’

Moreover, he said, the outcome of the latest forecast exercise was ‘highly uncertain, given in particular the unclear outlook for wage developments.’

‘It is, therefore, necessary to take one more step’, he said. ‘As they say, better to be safe than sorry.’

Although one possibility was pausing in September and then hiking again next month or at the end of the year, the ‘preferable, reasonable’ option was to increase borrowing costs by 25bp next week, he said.

‘It is a more straightforward and efficient solution’, he said. ‘Markets receive a clearer indication about the likely terminal rate, and we have more time to evaluate whether inflation is on a sustainable downward path towards our target.’

Were the ECB to go that route, ‘I certainly won’t object’, he said.