The hawks from the ECB are in favor of a rate hike, even if it turns out to be exaggerated

FRANKFURT, June 19 (Reuters) – Inflation in the euro zone could exceed even recently raised official forecasts, so the European Central Bank is better off overdoing aggressively tightening monetary policy to counter price rises than stopping interest rate hikes too soon, ECB officials said on Monday .

“We must continue to rely heavily on data and (not be afraid) to make mistakes – it is better to do too much than not enough,” said Isabelle Schnabel, a hawkish member of the ECB Executive Board.

“The risk of both a reversal of inflation expectations and a weakening of monetary policy indicates that there is a limit to how long inflation can stay above our 2% target,” added Schnabel.

Slovak central bank governor Peter Kazimir, another conservative who often sided with Schnabel, spoke in a similar tone on Monday.

“Continuing to tighten monetary policy is the only sensible way forward,” Kazhimir wrote on his blog. “Failure to do what needs to be done is a much greater risk than the risk of overtightening.”

Schnabel added, however, that higher interest rates could be reversed quickly, so the risk was relatively low, and entrenched inflation would spell long-term pain for the economy.

The original message in English is available under the code: (Balazs Koranyi, translated by Tomasz Kanik)


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