MNI: ECB Lautenschlaeger: Rate Rise Could Still Come This Year

By Luke Heighton

     FRANKFURT (MNI) - Key eurozone interest rates could still rise this year,

the European Central Bank's 's Sabine Lautenschlaeger said Thursday, as she

insisted the recent dip in euro-area inflation was 'nothing surprising'.

     Lautenschlaeger, a member of the ECB's Executive Board and Vice-Chair of

the Supervisory Board of the Single Supervisory Mechanism, said she was waiting

to see the March economic projections, but was still of the view that a rate

rise is due in 2019.

     Here are the key point from the interview with Politico published Thursday.

     - Lautenschlaeger denied Europe's economy has been 'overly dependent' on

quantitative easing for growth, and that the two were not as closely linked as

sometimes assumed. 'It was clear that with the base effects of the energy

prices, the inflation rate would drop. That's why we've always said that we need

to see a sustained adjustment in the path of inflation; not a change in the

month that we just had but a sustained adjustment. The core inflation rate

didn't dip that much.'

     - On the probably of a 2019 rate hike, Lautenschlaeger said: 'I'll wait for

the projections coming in March before I change my view. I'm data-driven in

this, and I think that as we are still in the environment we projected. I do not

feel disheartened yet and then you have to think where you will start with a

rise in interest rates. We have different key rates, not only one.

     - She confirmed that the ECB will be looking into credit underwriting

standards -- in particular in real estate and leveraged finance -- as a

'supervisory priority' over the next two years, with the first 'development'

expected this year.

--MNI Frankfurt Bureau; +49-69-720-146; email: luke.heighton@marketnews.com

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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