(Kitco News) - More talk about hikes from the ECB today. This comes after two weeks of plugging rate rises. There just seems to be some confusion about the speed and timing. A 25 bps hike is expected in July but the size beyond that is in question.
Estonian Governor Muller said “Given the inflation outlook, it’s appropriate to start raising interest rates in July” by a quarter-point, Muller said in an interview in Dubrovnik, Croatia, on Sunday. “We should continue with a further hike of 50 basis points in September.”
Money markets are betting on a two-percentage-point rate increase by June 2023. That compares with as little as 173 basis points on Friday. Traders continue to bet on three-quarter-points of hikes by September.
ECB's Vasle has said there will likely be more hikes in Q4 after September. In addition to this Vasle has been talking about inflation and the economy. He said that the inflation issue has been caused by the war as the EU is too dependent on Russia for energy. But in regards to GDP he said "I don’t expect a recession and in fact, I think there’s a possibility for a positive surprise," adding "Services are booming and the labour market is tight.".
Robert Holzmann “We will have to make an assessment where the economic development is going and where inflation stands and afterwards there’s ample room to hike in 0.25 and 0.5 levels to whatever rate we think, we consider reasonable,” ECB's Nagel weighed in by saying, "If monetary policy falls behind the curve, even stronger hikes in interest rates could become necessary to get inflation under control," adding. "This would create much higher economic costs.".
