The Governor of the Slovak central bank and member of the Governing Council of the European Central Bank (ECB), Peter Kazimir, he said on Monday he expects a 25 basis point rate hike in July and is open to discussing a 50 basis point move, perhaps by September, amid record inflation in the euro zone, Reuters reported.
The neutral rate in the Eurozone is closer to 2.0% than 1.0%, he opined, meaning some 200 basis points of adjustment will be needed for interest rates to return to neutral.
Raising interest rates to neutral may not be enough to contain inflation, he warned, noting that inflation will remain above the bank’s target in 2024 and possibly return in 2025.
In addition, Kazimir warned that a brief recession in some eurozone countries is possible this year, but a bloc-wide recession is unlikely. Finally, Kazimir pointed out that inflation is widening but not yet unanchored.
Source: Fx Street
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