BRUSSELS, March 3 (Reuters) - The European Central Bank
could consider raising its key interest rate as high as 4% if
underlying inflation in the euro zone remains persistently high,
ECB Governing Council member Pierre Wunsch said in comments
embargoed until Friday.
"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.
(Reporting by Philip Blenkinsop; Editing by Hugh Lawson)
@reutersPhilB;))
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