ECB Rates Likely Positive by Early Next Year, Makhlouf Says - BLOOMBERG
MAY 13, 2022
(Bloomberg) -- The European Central Bank will probably raise interest rates back above zero by early 2023 to combat record euro-area inflation, according to Governing Council member Gabriel Makhlouf.
The Irish official joined a growing group on the ECB’s Governing Council in suggesting that net bond-buying should end “next month or in July” -- a step that would pave the way for a first rate hike in more than a decade.
“It is realistic to expect that the first move in the ECB’s interest rates will happen soon after net asset purchases end and that rates are likely to be in positive territory by early next year,” Makhlouf said Thursday in a speech.
“This isn’t forward guidance: the calibration of our policies should remain data-dependent and we should maintain vigilance, optionality and flexibility as core principles in our decision-making,” he said.
Earlier Thursday, fellow Governing Council member Peter Kazimir became the latest policy maker to signal his support for a July rate increase. A growing contingent is also embracing the idea of taking interest rates above zero in 2022.
Makhlouf also said:
- “The possibility of adverse effects from our non-standard measures on market functioning were assessed as the balance sheet grew, and a similar assessment will be just as important when the size of our balance sheet reduces”
- “The disinflationary dynamics that the euro area has experienced over the last decade are very unlikely to return and we have now reached the point when we need to act”