(Reuters) – The following are comments from key European Central Bank policymakers in the run up to the June 15 policy meeting.
The ECB has already said that “more ground” needs to be covered, universally understood to mean that another rate hike is coming, but views on the outlook further out diverge.
JOACHIM NAGEL, BUNDESBANK PRESIDENT, MAY 23
“Monetary policy tightening has not yet reached its end. Several more interest rate steps will be needed to reach a sufficiently restrictive level, and we will then have to maintain this level for a sufficiently long time until inflation has fallen sustainably.
“Our medium-term goal is 2%, no more and no less. And we want to achieve this goal in the near future.”
KLAAS KNOT, DUTCH CENTRAL BANK GOVERNOR, MAY 25
“The two hikes in June and July are fully priced in and our inflation outlook is already conditional on those. So, we should deliver on them. From September on, I am open-minded.
“If we reach the peak in rates, at some not-too-distant point, we will probably have to stay there for a significant period. Market pricing of rate cuts is overly optimistic.
“Underlying inflation, I think, is currently our main concern and it’s not yet showing signs of abating, particularly not in the services sector. As monetary policymakers, we need to be assured that we also see a meaningful reversal in underlying inflation.”
FRANCOIS VILLEROY DE GALHAU, FRENCH CENTRAL BANK GOVERNOR, MAY 22
“I expect today that we will be at the terminal rate not later than by (the end of the) summer.
“In the meantime, we have three possible Governing Councils either for hiking or pausing, but don’t deduce a guidance from this or a preference for a given terminal rate.
PHILIP LANE, ECB CHIEF ECONOMIC, MAY 26
“We’ve chosen at the Governing Council not to convey a week by week or meeting by meeting (estimate on the) terminal rate because it conveys a sense of certainty which doesn’t exist.
“When energy prices fall, core inflation does follow, because there is less pressure from an energy cost, there’s less pressure on the cost of living, therefore on nominal wage increases.
“We do think this spectacular reversal of energy prices will feed into lower core, but the timeline for that and the scale of it is uncertain.”
ISABEL SCHNABEL, ECB BOARD MEMBER, MAY 9
“Based on today’s data, there is no doubt that we have to do more to bring inflation back to our 2% target in a timely manner.
“We will raise rates decisively until it becomes clear that core inflation is also declining on a sustained basis.”
PABLO HERNANDEZ DE COS, SPANISH CENTRAL BANK CHIEF, MAY 22
“The process of tightening our monetary policy is well underway, although, based on the information currently available to us, we have some way to go.
“Interest rates will have to remain in restrictive territory for an extended period of time to achieve our objective in a sustained manner over time.”
LUIS DE GUINDOS, ECB VICE PRESIDENT, MAY 18
“A significant part of the journey has been made, there is still some way to go, probably the road ahead is shorter, but I don’t know what the end point is going to be.
(Reporting by Balazs Koranyi; Editing by Toby Chopra)
