Free Trial

MNI BRIEF: Interest Rates Must Go 'Much Higher' - ECB's Kazaks

(MNI) LONDON
(MNI) Riga

Eurozone interest rates will need to rise "much higher," Bank of Latvia governor Martins Kazaks said Thursday, as he noted the baseline scenario of a shallow euro area recession "insufficient to break the backbone of inflation."

There is no need to pause rate hikes at the turn of next year, Kazaks said, with further hikes clearly necessary until core inflation in particular is brought back to the ECB's 2% target -- albeit not necessarily at the same 75bps pace seen over the last two monetary policy meetings (MNI ECB WATCH: ECB Hikes 75bp, Changes TLTRO Terms).

The wind-down of APP reinvestments should begin soon, but cautiously at first, Kazaks told a conference hosted by the Latvians, adding that the European Central Bank's Transmission Protection instrument, flexible PEPP reinvestments and OMT can be used to address any market fragmentation issues that may arise.

MNI London Bureau | +44 20 3983 7894 | luke.heighton@marketnews.com
MNI London Bureau | +44 20 3983 7894 | luke.heighton@marketnews.com

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.