European Central Bank Governing Council member calls for higher interest rates

Member of the Board of Governors of the European Central Bank Mārtiņš Kazaks called for an increase in interest rates by the end of the year.

Kazaks said interest rates should be raised after the end of the year, at a time when economists increasingly expect the eurozone to be in the midst of a recession.

The reason for the protracted tough stance, according to a Latvian official, is that high inflation is likely to continue.

The official supports a 75 basis point increase this month and another 50 or 75 points at the 2022 closing meeting in December, depending on data and price expectations, Bloomberg News reported today.

“Given the current trend, I don’t see the need to pause after this,” Kazaks said in an interview in Washington, “The pace may slow down a little, and I would say that we are starting to use a wider range of tools to work along the entire yield curve.”

With borrowing costs rising after a decade-long hiatus, some officials are calling for a repricing once a neutral interest rate is reached, which neither stimulates nor discourages the economy.

Source: db a