A growing chorus of ECB officials expect the rate-hiking cycle to end soon, signaling a newfound consensus after tensions at their last meeting in March. The governor of the French central bank, Francois Villeroy de Galhau he said on Friday that the ECB had completed most of the monetary tightening needed to bring inflation back to the 2% target over the medium term. Even if Eurozone inflation remains at +6,9% on an annual basis, while the relative growth in March is equal to +0,9% m/m.
ECB Governing Council, opinions on rates
Since then, his Governing Council colleagues from Greece, Lithuania and Croatia have expressed similar views. But let’s see together what the various central bankers and members of the ECB board have said.
Francois Villeroy de Galhau, the French central bank governor said, “While we have completed most of our upward journey, we may still have some way to go.” (31 March)
Yannis Stournarasthe governor of the central bank of the Greecehe has declared “After recent events, I now feel that we are nearing the end of the rate hike cycle. I can’t say it’s over, but we are definitely close to the end. (April 2)
Gediminas Simkus, the governor of the central bank of Lithuania: “I think we’ve done most of the way through interest rate hikes, but we’re not there yet.” (3rd April)
Boris Vujcic, the governor of the central bank Croatian claims that “Most of the rate hike cycle is behind us.” (April 5)
Although the president, Christine Lagarde has not faced major disagreements between the various members of the board regarding interest rate policy, opinions have begun to diverge on how much longer we need to continue with the hike cycle to bring inflation back to 2%. in the medium term.
Members disagree with the rates
According to Christine Lagarde, three or four European Central Bank officials did not support the March increase by 50 pb which brought the deposit rate back to 3%. That group, he said, would have preferred to wait for financial markets to calm down after the recent banking sector crisis.
The latest observations suggest that traders betting on two more 25 basis point hikes could be close to what bankers have in mind. Even the falcon Robert Holzman, the governor of the central bank of Austriawhich had previously claimed a terminal rate of 4.5%now seems to lean towards doing less.