By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Emmanuel Moulin said on Monday that the ECB had made clear it was neither starting a rate hike cycle nor signalling further increases in coming meetings, stressing that future decisions would continue to be taken meeting by meeting.
In an interview with French radio France Inter, Moulin, who heads the Banque de France, said the ECB’s latest rate increase was aimed at preventing higher energy prices from feeding through to broader inflation.
“What we're seeing today is that it's starting with services, and in particular services that are heavily dependent on energy, notably transportation, air transport, and logistics,” he said, adding that food prices could also go up. “We want to avoid that and we want to avoid an inflationary spiral.”
Referring to the inflation surge of 2022, Moulin suggested that the ECB was seeking to avoid a repeat of that episode, but said that it was reacting “pragmatically and rather modestly, by raising our key interest rate by 25bp: from 2% to 2.25%, and we have stated that we are not initiating a rate hike cycle today.”
Moulin said the ECB would continue to monitor developments meeting by meeting.
Asked about criticism that rates had been raised despite a still-fragile economy, he described the decision as “appropriate, reasoned and logical,” while stressing that “we are not saying that we will raise rates in future meetings.”
He added that the European economy was “fairly resilient.”
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