MNI BRIEF: Mon Pol Transmission Debate Grows Post March–De Cos

The transmission impact across the euro area of recent European Central Bank rate hikes will be key in determining policy action beyond March, Bank of Spain Governor Pablo Hernandez de Cos said at an event Tuesday.

There has been much uncertainty over the current and future effects of the ECB’s tightening as the current round of rate hikes "is unprecedented in its speed” and macro-financial conditions are different from previous cycles, de Cos said. Earlier Tuesday, ECB chief economist Philip Lane was reported saying he sees transmission effects already filtering through, with 'significant evidence that monetary policy is kicking in'.

Along with transmission effects, de Cos listed other important elements that will influence in ECB’s future movements: the pass-through of the inflationary shock to core inflation and the symmetry in recent energy prices decline, the euro exchange rate, wages, China's reopening and the resilience of the euro area.