The European Central Bank’s tough talk may not have convinced investors hoping for an early end to rate hikes, but ECB policymakers largely agree on how much more is needed to tame inflation, six of them said. | Reuters
But on- and off-record conversations with half a dozen policymakers suggest the ECB’s 26-member Governing Council is more united on the need for further rate increases than markets perceive, and differences on the final destination mostly small.
“The March rate hike is not the last one,” Lithuania’s Gediminas Šimkus said. “It could be 50 basis points in or 25, but hardly 75.”Several hawkish policymakers who spoke on condition of anonymity said they were comfortable with the 3.5 percent peak rate financial markets had priced in before Thursday’s meeting.
On Thursday, ECB President Christine Lagarde cited high core inflation to explain why “we have more ground to cover and we are not done”. Underlying inflation has been hovering above 5 percent in recent months, even as overall inflation is declining fast because of falling energy prices and base effects.
“In the grand scheme of things, we can be relatively confident about a terminal rate of 3.25 percent-3.50 percent,” UBS economist Reinhard Cluse said.
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