He European Central Bank needs to continue raising interest rates and a 50 basis point hike on May 4 is not ruled out, as core inflation may not peak very soon, Isabel Schnabel, board member of the entity, told Politico .
The ECB has raised rates in six consecutive meetings, and its officials are now torn between a 25 or 50 basis point increase in the bank’s 3% deposit rate at the next policy meeting.
“It is clear that it is necessary to continue raising rates, but the amount of the increases will depend on the data that is received,” Schnabel told Politico on Monday. “Dependency on data means that the ability (to climb) 50 basis points It’s not off the table.”
Schnabel said that the inflation The core, which filters out volatile food and energy prices, is showing very strong momentum and it is not clear that it will top out “very soon”.
But even a peak is not necessarily a trigger for the ECB, because officials need to be confident that core inflation is on a sustained downward path.
“We need to see a sustained decline in core inflation to give us confidence that our measures are starting to work,” Schnabel added.
When enumerating the possible obstacles to such a reversal, Schnabel pointed out that the service sector it is recovering rapidly and wage growth is picking up.
Schnabel also said that the recent turbulence in the banking sector could lead to a further tightening of financing conditions and that this is something that should be taken into account.
