The head of the Central Bank of Finland, Olli Rehn, is the last ECB official to seek an initial increase in the ECB’s deposit rate in July.
(Boursier.com) – As the US Federal Reserve and the Bank of England tighten monetary policy in the face of rapid inflation, more and more European Central Bank officials are urging the institution to begin the process of raising rates at its July meeting or even earlier …
on this day Chairman of the Central Bank of Finland Olli Rehn, at the July meeting of the ECB announced the first rate hike. Mr Rehn estimated that at the July meeting, the ECB should raise the deposit rate, which is currently set at -0.5%, by a quarter of a point.
In an interview with the Finnish daily Helsingin Sanomat, Olli Rehn, a member of the ECB’s Governing Council, said: “I think it would be wise toraise the deposit rate by 0.25 percentage points in July and reduce it to zero by autumn. After that, we can continue to further normalize monetary policy gradually and proactively, “he said.
On Tuesday, an influential member of the village ECB Executive Board, German economist Isabel Schnabel, said in an interview with the German newspaper Handelsblatt that “given the current conditions, raising rates in July is possible.” April 21 Chairman of the National Bank of Belgium Pierre Vunsch, considered it “obvious” to raise the deposit rate to zero or even a slightly positive level by the end of the year. He said he was in favor of the first round of screws in July.
“Hawk” Robert Holzmann would like to perform in June
on his side, Robert Holzmann, Chairman of the Central Bank of Austria, was even more “hawkish”, given the increase in rates in June. Asked this Thursday about a possible increase during the event in Salzburg, he replied that “we plan to do so (…) We will discuss this at our meeting in June, and probably will.” Mr Holtzman, the most hawk on the ECB’s Board of Governors, has repeatedly called for the normalization of the ECB’s monetary policy.
As for ECB President Christine Lagardeshe hinted that after the end of the asset purchase, “probably in July”, the first increase in European rates may occur “after some time”.
Inflation in the euro area reached 7.4% year on year in March, the highest since the single currency, prompting several ECB officials to call for an early end to the central bank’s bond-buying program, a prelude to the rate hike.
The Fed and the Bank of England are maneuvering in the face of rapid prices
On Wednesday, the US Federal Reserve raised the key interest rate by half a point (50 basis points) from 0.75% to 1% and added that further gestures of monetary policy will be “appropriate” in the coming months to fight inflation, which in March in the US reached 8.5%. The Fed has also developed a detailed schedule for the balance sheet reduction, which will begin gradually from June 1.
On Thursday, the Bank of England (BoE) also extended the bullish cycle, raising interest rates by a quarter of a point, raising it to 1%, the highest level since 2009. The Bank of England estimates that inflation could reach 10% this year in the UK, and now expects a recession in 2023 (-0.25% for GDP), against a growth of 1.25% previously forecast.
“Global inflationary pressures have risen sharply since Russia’s invasion of Ukraine. This has led to a significant deterioration in the prospects for global growth and growth in the UK, “- said the central bank.