ECB’s Kažimír: ‘Cannot Rule Out the Possibility of Further Rate Increases Today’

18 September 2023

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Peter Kažimír on Monday said that the ECB might still have to hike rates.

In a statement issued on the website of the National Bank of Slovakia, which he heads, Kažimír said that he hoped last Thursday’s 25bp rate hike was the final one, but that he could not exclude more tightening.

‘Only the March forecast can confirm that we are heading unequivocally and steadily towards our inflation goal’, he said. ‘That is why I cannot rule out the possibility of further rate increases today.’

As for the question of duration, rates must remain high ‘[a]s long as we are not sure that inflation is undoubtedly heading towards the target despite the ever-present risks’, making it ‘premature to place market bets on when the first interest rate cuts will occur.’

If the current level is the peak, rates may need to ‘spend the winter, spring and summer here’, he said.

Kažimír suggested waiting six months before making any adjustments to plans for the PEPP and APP.

‘As soon as incoming economic data and analyses confirm that further tightening is unnecessary, I see room for a debate about adjusting the pace of our quantitative tightening’, he said. ‘In other words, how quickly will we reduce our bond portfolio accumulated in recent years.’