ECB to hike again but “very close” to neutral rates – Herodotou
6:22 am Tuesday, December 06th, 2022
By Marc Jones
LONDON (Reuters) – European Central Bank interest rates will go up again but are now “very near” their neutral level, ECB policymaker Constantinos Herodotou said on Tuesday.
“We are very near the neutral rate. There will be I think another hike or hikes,” Herodotou, Cyprus’ ECB Governing Council member, told a Bloomberg event.
Having raised rates by a combined 200 basis points since July, the ECB is expected to hike by another 50 basis points on Dec 15, slowing the pace of policy tightening after back-to-back 75 point moves.
Herodotou underscored that he was referring to rate hikes in the plural in his comments be added that he didn’t expect the euro zone, which will consist of 20 countries from next year, to suffer a “hard landing” despite its current slowdown.
“There are a number of variables that may give some comfort and should there be an economic impact, it won’t be.. a hard landing” he said, pointing to government support and a resilient European jobs market.
The ECB will also publish new staff forecasts at its meeting that are expected to show inflation won’t return to anywhere near the bank’s preferred level of close to 2% next year and a mild recession.
“There will be more rate hikes to contain inflation,” Herodotou said.
(Reporting by Marc Jones; editing by Huw Jones)
