FRANKFURT (Reuters) – Even if the European Central Bank’s (ECB) euro zone rate hike, decided last Thursday, appears for the moment to be the last of the current cycle, officials at the institution will need to wait until in March to be sure and further rate hikes cannot yet be ruled out, Bank of Slovakia Governor Peter Kazimir said on Monday.
The ECB last week raised its deposit rate to a record high of 4% and hinted that its monetary tightening cycle, the most aggressive since the creation of the institution, was probably coming to an end, which fueled the hope on the markets of a first rate cut from the end of spring 2024.
“Only the March forecasts can confirm that we are unequivocally and gradually moving towards our inflation target,” Peter Kazimir said in an article. “This is why I cannot currently rule out the possibility of further rate hikes,” he added.
Peter Kazimir was one of the few ECB officials to openly call for a rate hike ahead of the September meeting, saying that underlying inflation continues to simmer at risk of remaining above the rate. objective pursued by the ECB.
According to the governor of the Slovak central bank, although we are already at the terminal rate stage, that is to say at the peak of the cost of credit, the ECB will still have to keep its rates at a high level for a prolonged period.
“Suppose we are (already) at the summit. If so, we may have to camp at that level for a while and spend the winter, spring and summer at that level,” a- he said.
“It is therefore premature to bet on the date of the first cut in interest rates,” he added.
The end of rate hikes would also open a new phase of discussion on the central bank’s two bond-buying programs, the Pandemic Emergency Purchase Program (PEPP) and the Pandemic Emergency Purchase Program (PEPP). of assets (APP).
“As soon as economic data and analysis confirm that further tightening is not necessary, I think it will be appropriate to discuss adjusting the pace of our quantitative tightening,” Peter Kazimir said.
(Report by Balazs Koranyi, Claude Chendjou, edited by Blandine Hénault)
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