(Archyde.com) – The European Central Bank will likely have to raise interest rates once more to dampen persistent inflation, two leading ECB governing council ‘hawks’ said on Saturday, while downplaying the risk of a repeat of the 2008 financial crisis.
The governors of the central banks of Austria and Belgium echoed the remarks made the day before by two of their colleagues – Slovak and Lithuanian -, who also advocated a turn of the screw on rates in the face of inflation currently running at 8.5% in the euro zone.
The ECB raised rates by 50 basis points as expected on Thursday. For the Austrian Robert Holzmann and the Belgian Pierre Wunsch, additional actions will probably be required.
Since last July, the ECB has tightened its monetary policy by a total of 350 basis points, bringing its main refinancing rate to 3.5%.
“We know we have to do more,” Pierre Wunsch told Belgian newspaper l’Echo. “At what pace? It’s not easy. It will be played meeting following meeting.”
Asked how high the benchmark rate might go, Robert Holzmann replied to ORF 1 radio: “Some of us are hoping it will stay below 4 (%). I’m afraid it will probably go above- above 4 (%).”
Asked regarding the risk of contagion of the wave of mistrust towards banking stocks, in the wake of the fall of two American banks and the difficulties of the second Swiss bank Crédit Suisse, Pierre Wunsch replied that he did not expect a repetition of the financial crisis of 2008.
According to him, European banks are subject to stricter rules than American regional banks.
Robert Holzmann also said he did not see a risk of a new global financial crisis because the problems of Silicon Valley Bank and Credit Suisse are rather “specific problems”.
(With Balasz Koranyi, Gilles Guillaume for the French version)
by Sabine Siebold and Paul Carrel
