FRANKFURT (Reuters) – The European Central Bank (ECB) still needs to raise interest rates significantly as widespread disinflation has yet to begin in the euro zone, ECB executive board member Isabel Schnabel said on Friday. , during a question-and-answer session on Twitter.
The ECB has raised interest rates by 300 basis points since July and indicated that it would raise them another 50 basis points at the next meeting of the Governing Council in March.
Isabel Schnabel said another 50 basis point hike in May could not be ruled out.
“Generalized disinflation has not yet started in the eurozone,” she said. “Rates need to get to a sufficiently restrictive level…and we will keep rates high until we see strong evidence that underlying inflation is returning to our target.”
“We need to stay the course and raise rates significantly,” she continued.
Asked if that meant another 50 basis point interest rate hike in May, she said that would depend on future economic indicators.
Inflation in the euro zone has decelerated since a peak reached in October, thanks to a decline in energy prices. But underlying price growth appears to be holding strong, partly due to rapidly rising wages.
(Report Balazs Koranyi; Blandine Hénault for the French version, edited by Matthieu Protard)
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