The European Central Bank may need to raise interest rates for longer than currently anticipated, and September could be the earliest moment when policymakers can judge whether past rate hikes have been effective, ECB policymaker Peter Kazimir said on Tuesday.
The ECB has lifted rates at each of its past seven meetings to fight a historic surge in consumer prices and policymakers have signalled further hikes to come as inflation pressures continue to build.
"Based on today's data, we will have to keep raising interest rates for longer than anticipated," Kazimir, Slovakia's central bank chief, said in a blog post. "So, slowing down the pace to 25 bps is a step that will allow us to go gradually higher for longer, should that be necessary and warranted by incoming data."
That appears to be in contrast with the views of some policymakers who speak of rate hikes in the plural and argue that once rates hit their peak, they should stay there for some time. Part of the worry is that high underlying price pressures and relatively quick nominal wage growth will keep upward pressure on prices for some time to come.
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