The European Central Bank has further to go on tightening monetary policy, with core inflation remaining very high, according to Governing Council member Joachim Nagel.
While it’s too early to speculate over the outcome of the ECB’s next meeting, in May, the Bundesbank chief told reporters Thursday in Washington that he expects the cycle of hikes to continue.
ECB officials agree that the unprecedented tightening that began last summer is nearing an end. But most say rates should rise again next month, and some have begun to discuss the size of that move.
Belgium’s Pierre Wunsch has said the choice is between a fourth straight 50 basis-point hike or a smaller, quarter-point move – and will depend on April’s inflation figures.
But with underlying price pressures, excluding energy and food costs, hitting another record last month and remaining sticky, Austria’s Robert Holzmann backs the larger increment.
It’s important to watch for signs of loan growth slowing in the wake of the recent financial stress, according to Nagel. But he said there’s no danger of a systemic banking crisis unfolding. – Bloomberg
