“If there was evidence that high inflation could unanchor inflation expectations, then the policy rate consistent with our target would be in tight territory,” she said in a speech.
Policymakers have talked about pausing rate hikes once the ECB hits the so-called “neutral” level, which neither boosts nor dampens growth, but a growing number of rate setters now see the risk that rates need to go up.
Inflation is already above 9% and could rise further, while longer-term expectations, a key driver for rates, are now above the ECB’s 2% target.