ECB's Elderson: Policy Rates Haven’t Necessarily Peaked; Uncertainty Too High to Say

27 September 2023

By David Barwick – FRANKFURT (Econostream) - European Central Bank Executive Board member Frank Elderson said on Wednesday that a further rate hike by the ECB could not be excluded under conditions of high uncertainty.

In an interview with MNI also published on the website of the ECB, Elderson broke no new ground with respect to monetary policy, reiterating that ‘with the decisions we’ve made and on the basis of our current assessment, the current interest rate levels will make a substantial contribution to us reaching our inflation target in the medium term.’

‘Does that mean policy rates have peaked?’ he asked rhetorically. 'Not necessarily. There is still a lot of uncertainty. That’s why we take these decisions meeting by meeting, on a data-dependent basis. Making any predictions about what we will do next would not be consistent with that approach.'

Food and energy prices constituted upside inflation risks, he noted.

The euro area is currently in ‘a more protracted period of sluggish growth than we were expecting’, though job markets remained strong and disposable income should increase, he said.

He rejected a question on whether growth came in significantly weaker than expected. ‘We take decisions on a meeting-by-meeting basis and we look at all the incoming data’, he said.

The ECB was willing to make any necessary adjustments to its policy tools, he said. ‘Based on today’s assessments, we are comfortable that a substantial contribution is being made to the timely return of inflation to our target.’, he said. ‘e will keep rates at sufficiently restrictive levels for as long as necessary.’