European Central Bank executive board member Frank Elderson said policymakers could start raising interest rates from record lows in July and downplaying the risk of a recession in the euro zone as the war in Ukraine saps growth and fuels already record inflation.
r Elderson said the ECB could complete net asset purchases – a harbinger of rising borrowing costs – “at the first opportunity”.
“This will allow us to start considering a normalization of key interest rates in July, of course depending on the incoming data as always,” he told a conference in Brussels on Wednesday.
While the recovery from the pandemic has been smaller and weaker than expected, a recession is currently not foreseen, depending on how the war unfolds.
With inflation nearly four times the ECB’s 2 percent target, officials are increasingly pushing for a 25 basis point rate hike in July.
The ECB has not increased borrowing costs since 2011 and its deposit rate has been negative since 2014.
ECB Governing Council member Francois Villeroy de Galhau told French radio earlier on Wednesday that he expects interest rates to be raised gradually “from the summer”.
After the end of bond purchases in June, Bundesbank boss Joachim Nagel spoke out in favor of a “timely” interest rate hike.
The rate increase “could happen in July,” he said, but how many more will follow this year “remains to be seen.”
A number of ECB officials, including President Christine Lagarde, are scheduled to speak later on Wednesday amid the debate on borrowing costs.
https://www.independent.ie/business/world/ecb-can-start-considering-rate-hikes-in-july-elderson-says-41638199.html ECB may start considering rate hikes in July, Elderson says