ECB Governing Council member Madis Muller said, “it’s most likely this won’t be the last rate rise in this cycle,” referring the the intended 50bps hike this month.
“It’s quite possible that interest rates will need to stay high for quite some time so that we can be sure that inflation will come back to, and remain at, close to 2%,” he added.
“Headline inflation started to come down toward the end of last year, mainly thanks to a decline in energy prices, and it fell to 8.5% in January. More worrying however is that core inflation has remained persistently high at more than 5%, as the underlying price pressures aren’t yet receding,” Muller said.
“If we hesitate, we may later have to raise interest rates much higher, and keep them high for much longer, in order to get inflation down to the target of 2% and to keep it there” he noted.
