Half-point rate hike in July cannot be ruled out, ECB member says

(Boursier.com) — The European Central Bank should consider an initial increase in its interest rates beyond the expected quarter-point hike if there are signs that high inflation readings are fueling the markets. expectations, according to Martins Kazaks. Since Sintra, the President of the Central Bank of Latvia told ‘Bloomberg Television’: “if we observe that the situation has deteriorated, that inflation is high and that we see negative news in terms of expectations of inflation, then, in my opinion, anticipating the increase would be a reasonable choice”.

The ECB should follow “what’s happening in the labor market, what’s happening with the anchoring of expectations – are expectations starting to rise?”, stressed the member of the Governing Council of the ECB, refusing to speculate whether changes in these indicators could warrant a half-point rate hike.

The leader described the risk of a recession as “not insignificant” as soaring prices eat away at consumption. On this subject, the data for the month of June unveiled on Friday will once again be closely monitored and should signal a new inflation record in the euro zone. Even so, Martins Kazaks believes rates can be increased “rather quickly”.