The Executive Board member of the European Central Bank (ECB), Fabio Panetta, has spoken out in favor of small interest rate hikes in the fight against high inflation. Small rate hikes allow for a better adjustment of monetary policy when recent rate hikes start to have an effect, Panetta said in London. According to the Italian currency watchdog, the key interest rates in the euro zone are already in the so-called restrictive range. This means that they slow down economic development.
With small rate hikes, it is possible to better balance the fight against high inflation on the one hand and the impact on economic growth on the other, said Panetta. At the next interest rate meeting of the ECB on March 16, the ECB already gave clear signals for another significant interest rate hike of 0.50 percentage points. In addition, the extent of future rate hikes has so far been left open.
Further rate hikes possible
ECB President Christine Lagarde had said before the European Parliament in Strasbourg that after the interest rate hike in March, the extent of the rate hikes would be discussed from meeting to meeting. Accordingly, future interest rate increases will depend on the further development of economic data.
On the other hand, ECB Councilor Klaas Knot recently brought another significant interest rate hike of 0.50 points into play in May. Should there not be a fundamental decline in inflation, another interest rate hike of the same size as in March could take place in May, said the Dutch central bank governor.