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MNI INTERVIEW: ECB's Simkus Says New Tool May Never Be Used

(MNI) London

Gediminas Simkus calls for rate hikes and says he hopes a new anti-fragmentation tool does not have to be used.

The European Central Bank should raise key interest rates by at least 50 basis points in September and possibly by the same amount in July, Bank of Lithuania Chairman Gediminas Simkus told MNI, adding that he hoped a proposed new tool aimed at capping yield spreads within the eurozone may never be used.

“A 50-basis-point rate rise might also become a policy option in July – but only if supported by incoming and substantially worsened data for inflation,” Gediminas Simkus said at the ECB Forum in Sintra,. “I think 50 basis points should be the baseline for September, assuming we don’t see any downward shocks to the inflation outlook by then, which I think is unlikely.”

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The European Central Bank should raise key interest rates by at least 50 basis points in September and possibly by the same amount in July, Bank of Lithuania Chairman Gediminas Simkus told MNI, adding that he hoped a proposed new tool aimed at capping yield spreads within the eurozone may never be used.

“A 50-basis-point rate rise might also become a policy option in July – but only if supported by incoming and substantially worsened data for inflation,” Gediminas Simkus said at the ECB Forum in Sintra,. “I think 50 basis points should be the baseline for September, assuming we don’t see any downward shocks to the inflation outlook by then, which I think is unlikely.”

Keep reading...Show less