On Monday we once again had statements from ECB council members after last week’s appearances following last week’s meeting. There are few novelties, except for the reaffirmation of similar broad movements for March. According to Committee member Robert Holzmann, inflation must be actively combatted until the citizens of the Eurozone feel that price stability is part of their daily lives. Holzmann did make an interesting point in explaining that the risk of too much tightening seems to be overshadowed by the risk of doing too little and that the ECB does not want the problem of high prices to take on a perennial tinge, aware that it has perhaps underestimated the persistence of high prices.
It may seem premature to bring forward a 50bp rate hike for March, but as the ECB explained, for now all the circumstances are in place for this to be the case. Another central banker, Martins Kazaks, explained that we need to see data that differs significantly from what is currently anticipated for a rate hike of such magnitude not to happen. “If the incoming data meet the ECB Council’s current expectations, rates will be raised by 50bp in March. However, if incoming data differ significantly from what is currently expected for the March meeting, the decision may also be changed”.
