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MNI BRIEF: ECB Could Hike By Further 75bps in October - Rehn

(MNI) LONDON
(MNI) London

The European Central Bank could hike by another 75 bps at its October meeting and perhaps push to reach a neutral rate before the end of the year, Governing Council member Olli Rehn said Wednesday.

Speaking in Helsinki, Rehn, who also serves as Bank of Finland Governor, said there was still a debate over whether to raise rates by 50 or 75 bps at the October 27 meeting, with policymakers waiting to see a further month of data before a decision. However, Rehn stressed reaching a neutral rate did not necessarily mean the ECB's job was done, noting that if fighting inflation meant moving into restrictive monetary policy, 'so be it'.

Rehn also said the ECB must look at the terms of its refinancing operations and how reserves held at the central bank are remunerated. (MNI SOURCES: ECB's Focus Shifts To Interest On Reserves or MNI INTERVIEW: ECB To Limit Reserve Remuneration -Papadia)

Rehn's comments fit largely with current market pricing, with a 75 bps hike seen as far more likely than not, so perhaps the surprise could come in the form of a 50bps hike still being on the table.

MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com
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MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com
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