ECB Governing Council member Bostjan Vasle has emphasized the need for further monetary tightening in the face of persistent inflation, speaking on the sidelines of the ECB Forum.
“Given the persistence of inflation, we need to keep tightening monetary policy at our next meeting,” Vasle stated.
Beyond July, the decision to further hike rates will be “data-dependent”. However, Vasle conveyed that the “burden of proof” lies in data indicating “further rate hike is not needed instead that it is needed.”
Vasle dismissed arguments that weaker growth readings might ease the ECB’s fight against inflation. He asserted, “All these suggest that growth developments are not significantly different than our most recent projections.”
The ECB official also expressed concerns over expectations that corporate profit margins might decline and absorb the impact of wage hikes, terming such a prospect as bearing significant risks.
“The labour market is strong and consumption is resilient. So firms might continue to enjoy pricing power, especially because demand is too strong to push down margins,” he said.
