The European Central Bank may not need to raise interest rates further as signs are increasing that inflation is moving back to its 2% target, according to Governing Council member Bostjan Vasle.
(Bloomberg) — The European Central Bank may not need to raise interest rates further as signs are increasing that inflation is moving back to its 2% target, according to Governing Council member Bostjan Vasle.
Vasle, who also leads Slovenia’s central bank, spoke after data revealed a faster-than-expected retreat in euro-zone price pressures — a welcome sight for policymakers who delivered their 10th straight rate hike this month. While the ECB kept the door open to future moves, it argued that keeping borrowing costs at current levels for some time will significantly help damp inflation.
“It’s probably the case that we are done with interest-rate increases,” Vasle said during a panel discussion in Skopje. He argued the ECB must be persistent to ensure inflation eases sustainably and warned against any premature conclusions that the job is done.
“At the moment, it seems that we are doing quite well,” he said. “We are seeing some signs of inflation going down, also some first signs of sustainability of this trends, but on the other hand, there are still many uncertainties.”
Speaking on the same panel, Croatian central-bank chief Boris Vujcic expressed confidence that inflation is finally moving toward 2%, even if some of the latest improvements are due to statistical effects. But he also cautioned against being complacent.
“You might get into a situation where the inflation rate — the disinflation process — stops at a level, which is not your target,” he said. “Then it’s challenging for monetary policy, because it has to do something more to bring it all the way down to 2%.”
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