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MNI SOURCES1: ECB Seen Making Two To Three 25-BP Hikes In 2022

(MNI) London

A potential 50-basis-point hike floated by Dutch central bank chief Klaas Knot has few backers for now.

A majority on the European Central Bank’s Governing Council is prepared to back at least two 25-basis-point rate hikes this year, with some leaving the door open to three as part of a move towards neutral settings, Eurosystem sources told MNI, with several officials downplaying a call by the Dutch central bank chief for a possible 50-basis-point increase if inflation continues to worsen.

Various senior ECB officials, including the governors of the Bank of France and the Bank of Finland, have called for rates to be back at positive levels by the end of the year. Klaas Knot of the Netherlands went further in a TV interview on Tuesday, saying that there should not only be a 25-basis-point increase in July but that a 50-basis-point hike in the deposit rate in coming months from its current -0.5% might be appropriate if the price outlook deteriorates further.

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A majority on the European Central Bank’s Governing Council is prepared to back at least two 25-basis-point rate hikes this year, with some leaving the door open to three as part of a move towards neutral settings, Eurosystem sources told MNI, with several officials downplaying a call by the Dutch central bank chief for a possible 50-basis-point increase if inflation continues to worsen.

Various senior ECB officials, including the governors of the Bank of France and the Bank of Finland, have called for rates to be back at positive levels by the end of the year. Klaas Knot of the Netherlands went further in a TV interview on Tuesday, saying that there should not only be a 25-basis-point increase in July but that a 50-basis-point hike in the deposit rate in coming months from its current -0.5% might be appropriate if the price outlook deteriorates further.

Keep reading...Show less