“If the core inflation would remain at the level we see today in Europe of above 5%, and if we don’t get clear signals that core inflation is going down, we will have to do more,” Belgian national bank governor Wunsch told a news conference at the bank.
Underlying inflation in the 20-nation euro zone, excluding volatile energy, food, alcohol and tobacco prices, hit 5.0% in October and rose to 5.6% in February, reinforcing evidence that energy-driven price rises are filtering into the broader economy via wages.
The ECB raised its deposit rate by 50 basis points in February to 2.50% and has already flagged a further 50 basis-point increase on March 16. ECB President Christine Lagarde confirmed this planned increase on Thursday.
Wunsch repeated a view he expressed a month ago that if core inflation remains at around 5%, then the ECB would have to look at what central banks elsewhere had done, like in the United States and Britain.
“For me, looking at rates of 4% would not be excluded,” he said. “But I want to insist I won’t make any judgment on where the rates would have to go without seeing the developments of core inflation.”
Markets are pricing in another 50 basis-point hike by the ECB on May 4 and, after recent warnings from more conservative policymakers, see the peak of rates at just above 4% at the turn of the year.
Source: Economy - investing.com
