Next Eurozone rate hike in focus as ‘big’ move supported

The European Central Bank should opt for a “big” rate hike in October, according to ECB Governing Council member Martins Kazaks, who said in an interview that subsequent rate hikes were likely to be smaller.

his Lithuanian counterpart Gediminas Simkus said he also favors 75 basis points next month.

The two central bank governors are taking part in a mammoth day of ECB speakers that will shed light on policymakers’ next rate move as inflation shows no sign of abating and the continent teeters on the brink of recession.

Thirteen of the 25 members of the ECB Governing Council will appear at events from Amsterdam to Vilnius on Thursday, with investors also looking for clues as to where the current interest rate cycle may peak and when the trillions of euros in bonds that have been sold during recent crises were purchased may shrink.

The comments — as well as inflation data from Spain and Germany — have the power to reshape cash rate bets, which are currently pricing in a 40 percent chance of a second 75 basis point hike at next month’s meeting.

ECB Governing Council member Gediminas Simkus told Bloomberg Television he is inclined to support a three-quarter-point rate hike next month as inflation nears a new all-time high.

According to Governing Council member Martins Kazaks, the ECB should hike rates by a further 75 basis points when it next sets policy in October, with steps likely to taper off thereafter.

“In the current situation, we can still make big strides, and the next step still has to be big because we are still far from rates consistent with 2% inflation,” Kazaks said in an interview on Wednesday Vilnius. “I would go for 75 basis points – let’s take a bigger step and raise rates faster.” Next Eurozone rate hike in focus as ‘big’ move supported

Fry Electronics Team

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