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MNI SOURCES2: September Hikes From 25-75Bps On Table For ECB

(MNI) London

Anything from 25- to 75-basis-point hikes could be on the table when the European Central Bank in September, though next week’s widely-expected 25-basis-point increase is now looking almost set in stone, Eurosystem sources told MNI.

Bar any downside surprises to incoming inflation datam a 50 basis-point hike in September remains the most probable outcome, one source said.

“I would not be surprised if the ambiguity over September will again point to 50 basis points,” the source said, but added that either 25- or 75-basis-point moves could be considered.

“The risks are all too evident on both sides of the ledger, although price pressure will dominate for now. The weaker euro, gas prices, gas supply, airline disruption to the travel/tourism industry, political upheaval, supply chain disruption, further Covid lockdowns in China,” the source said.

NEXT WEEK

But anything but a 25-basis-point hike next Thursday would be a major surprise, given the ECB’s guidance, sources said, even if some Governing Council members may call for 50 points. All sources agreed that the ECB should be at at least at zero by the autumn.

“Even if we do face weak growth or other weakening circumstances, we will still see a higher rate hike if it is necessary to fulfill our price stability mandate,” a Eurosystem official said. “Our primary mandate is our priority, and we will not sacrifice our mandate for German growth, for Italian growth.”

An ECB spokesperson declined to comment.

MNI London Bureau | +44 203-865-3829 | jason.webb@marketnews.com
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MNI London Bureau | +44 203-865-3829 | jason.webb@marketnews.com
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