Home / World Economy / World Economy News / ECB’s Simkus joins camp supporting 75 bps Oct rate hike

ECB’s Simkus joins camp supporting 75 bps Oct rate hike

The European Central Bank should raise interest rates by 75 basis points (bps) in October, Lithuanian central bank chief Gediminas Simkus told Bloomberg TV on Thursday, joining several colleagues calling for another large increase.

The ECB has raised rates by a combined 125 basis points over its past two meetings and promised further increases as inflation is rising towards 10%, and longer-term expectations have moved above its 2% target.

“My choice would be 75,” Simkus said, referring to basis points. “I understand a couple of options may be on the table but 50 is the minimum.”

When asked if a full percentage point could also be on the table, Simkus said that would be “definitely too much”, echoing similar comments from some policymakers.

Although the next policy meeting is almost a month away, ECB policymakers Peter Kazimir and Robert Holzmann have both come out in favour of a 75 bps increase while Olli Rehn listed 75 bps as one of the acceptable options.

The ECB said it would keep on raising its 0.75% deposit rate at least until it hits the neutral or natural level, an undefined rate that no longer stimulates growth but does not restrict it.

“I believe that the natural interest rate at this juncture is somewhat lower than 2% but there are many estimates,” Simkus said.

He said the ECB should also start talks “as soon as possible” over reducing its balance sheet, but a discussion should not necessarily mean imminent action.
Source: Reuters (Reporting by Balazs Koranyi Editing by Christian Schmollinger and Mark Potter)

Recent Videos

Hellenic Shipping News Worldwide Online Daily Newspaper on Hellenic and International Shipping