European Central Bank officials Joachim Nagel and Gabriel Makhlouf have both suggested they expect interest rate hikes to continue into the second quarter following two anticipated movements in February and March.
The ECB is almost certain to raise its main rate by 0.5 percentage points to 2.5% next week, but policymakers have expressed differing opinions for March, indicating that the issue is wide open despite recommendations for major policy tightening at a “steady pace”
According to Makhlouf, rates will need to be raised again in March, but policymakers must “wait and see exactly what the data tells us” Nagel stated that the ECB has already committed to a sharp rate hike within the next two months.
Both parties agreed the increases were unlikely to end there.
“Bearing in mind that inflation is very high and core inflation has actually gone up slightly, it would not be surprising to see us continue on this path of interest rate rises beyond the first quarter,” Makhlouf told lawmakers in Dublin.
The president of Germany’s Bundesbank, Nagel, told Spiegel magazine that he “wouldn’t be surprised if we have to keep raising rates even after the two announced steps.” if further rate hikes were necessary after the two announced increases.
Inflation in the euro zone fell to 9.2% on an annualized basis in December from 10.1% a month earlier, but according to Makhlouf, it remained “far too high.”