ECB’s Kažimír: ‘Additional Tightening Could Come, if Incoming Data Force Us to Take Such a Step’

30 October 2023

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Peter Kažimír on Monday said that those claiming the ECB was done hiking rates should not get ahead of themselves, as further tightening remained possible.

In a statement issued on the website of the National Bank of Slovakia, which he heads, Kažimír said that much of the ECB’s previous decisions still needed to transmit into the real economy, but that ‘[a]ll those voices coining this as the end of the cycle should hold their horses.’

‘It’s too soon to declare victory and say the job’s done’, he said. ‘As much as I would like this to be the end of the path, upside inflation risks have yet to dissipate entirely.’

Vigilance was called for, he said.

‘Long story short, additional tightening could come, if incoming data force us to take such a step’, he said.

The update of the macroeconomic projections in December would indicate whether inflation was indeed on a sustained downward trend, he said. New upside risks to inflation from the violence in the Middle East would hopefully not materialise, he said.

‘The Eurozone’s economy, already exposed to a combination of growth-slowing factors, struggles to regain momentum’, he said.

December and March are ‘two key milestones’, by the latter of which it should be clearer whether a wage-price spiral still threatens, he said.

‘Only then will we be able to say the tightening cycle is completed and move on to the subsequent – monitoring – phase’, he said.

‘As I have said several times, we will have to stay at the peak for the next few quarters’, he said. ‘Bets on rate cuts happening already in the first half of next year are entirely misplaced. The December meeting is going to be a very interesting one.’