ECB hints at 75 point rate hike for October


FRANKFURT/HELSINKI, Sept 28 (Reuters) – The European Central Bank (ECB) may have to raise interest rates by another 75 basis points at its October meeting and decide on another hike in December to bring them higher. at the “neutral” level, that is to say neither stimulating nor handicapping for the economy, several of its officials said on Wednesday.

The ECB, which began to tighten its monetary policy well after the other major central banks, has already raised its three key rates by a total of 125 basis points during its last two meetings, their fastest rise since the creation of the single currency. But it still faces the strength of inflation, which could not reach its peak for several months.

“I must say that 75 basis points, it is a very good candidate for (our next meeting in order to) maintain the rate of tightening, but we also have to wait for new data,” said the president of the national central bank. of Slovakia, Peter Kazimir, during a press conference.

“We must be vigorous, ruthless even, regardless of the looming recession,” he added.

His Finnish counterpart, Olli Rehn, considered one of the moderate members of the Governing Council, also said that a three-quarters percentage point hike was among the options to consider next month.

“There are arguments in favor of a decision on another significant rate hike, whether it is 75 or 50 basis points, or otherwise,” he told Reuters without further details.

“The case is growing stronger for quick and determined action,” he continued.

The markets are currently anticipating a deposit rate of 2% by the end of the year, against 0.75% currently, then 3% next spring and they do not foresee a return of inflation towards 2%, the target set by the ECB, before the end of 2024 at the earliest.

Central bank president Christine Lagarde said the first objective of the current rate hike cycle was the “neutral” rate.

“We need to bring inflation down to 2% in the medium term and we will do what we have to do, which is to keep raising interest rates in the next meetings,” she said at the meeting. of a conference in Frankfurt.

If the level of the “neutral” rate is not clearly defined, most economists place it between 1.5% and 2%, a level which, according to Olli Rehn, could be reached before the end of the year.

“From my perspective, we are heading towards the neutral rate zone by Christmas,” he told Reuters. “Once we get there, we’ll see if there’s a case for moving into more restrictive territory.”

Peter Kazimir specified that there was a consensus within the Board of Governors on the need to reach the “neutral” rate but not on the precise level that this implied. (Report Balazs Koranyi, Anne Kauranen, Tom Sims and Robert Mueller;, French version Marc Angrand, edited by Jean-Stéphane Brosse)




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