Gradual Opinion from ECB Chief Economist on Interest Rate Increase

Philip Lane, Chief Economist of the European Central Bank (ECB), made statements about the interest rate hike. While Lane noted that the normalization in monetary policy will progress gradually, he reinforced President Lagarde's forecast that negative interest rates will come to an end by September.

In his assessment to a Spanish newspaper, Lane noted that the 25 basis point rate hikes each in the July and September meetings would be an indicative rate of increase. Philip Lane said, "In our current situation assessment, we think that the medium-term inflation outlook is compatible with the 2 percent target. Therefore, a gradual approach to normalization would be appropriate." Inflation data to be released in the Euro Area this week may provide information about the level of monetary policy aggressiveness. According to economic surveys, inflation data to be released on Tuesday is expected to reach new record levels with 7.8 percent annually. Professor of Luis University in Rome Giorgio di Giorgio noted that the figures to be announced are not of great importance as they will determine the speed of interest rate increases. Some ECB officials state that higher rate hikes are an option, while others state that gradual increases would be appropriate. Bundesbank President Joachim Nagel advocates at least three rate hikes by the end of 2022, while his French counterpart, Francois Villeroy de Galhau, notes that there is currently no consensus on a 50 basis point hike.