ECB Official Knot, in an interview with a newspaper, stated that core inflation is about 6 percent and that inflation cannot be fought with an interest rate of 3 percent, adding that “the rate hike process is not over yet”.
Knot said the following about the interest rate increase process; “The question here is whether to continue with 50 basis points as in previous meetings, or with a smaller increase. We should determine this for the May meeting, but I have not made my decision yet.”
ECB officials are planning to raise interest rates further due to high inflation, but officials are also cautious due to the recent turmoil in the financial sector.
In an interview with the Bank’s Chief Economist, Philip Lane, on Thursday, “in line with our baseline scenario before the crisis in the banking sector, it would be appropriate to raise interest rates at the meeting in May as well. However, we will depend on the data to measure the accuracy of this scenario.”
Knot also stated that the banking sector crisis and the inflation problem cannot be considered separately.
He added that once the interest rate that will reduce knot inflation to the 2 percent target is reached, it may need to stay at that level for a long time.