ECB’s Müller: ‘No Further Rate Hikes Are Expected in the Coming Months’

15 September 2023

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Madis Müller on Friday said that the ECB did not anticipate having to increase official borrowing costs in the near future.

In a blog post on the website of the Estonian central bank, which he heads, Müller noted yesterday’s decision by the Governing Council to hike by a further 25bp, adding, ‘but we also made it clear that, to the best of our knowledge, no further interest rate hikes are expected in the coming months.’

The current level of interest rates is sufficiently high, he explained, ‘to be expected to bring inflation back to close to 2% in the euro area over the next two years, slowing credit growth and cooling the momentum of the Eurozone economy.’

‘This, of course, does not rule out the possibility that if the rapid price increase recedes more persistently than expected, interest rates will still have to be increased in the future’, he said.

According to Müller, poorer prospects for a return to price stability by 2025 were an important factor behind the decision to hike rates again.

Expectations earlier in the quarter of a euro area recovery had not been fulfilled, with personal spending hesitant and foreign demand weak, he said.