European Central Bank President Christine Lagarde speaks with Hungary’s Prime Minister Viktor Orban in Brussels The European Central Bank should consider raising interest rates by twice the planned amount next month if the inflation outlook deteriorates, according to Governing Council member Gediminas Simkus, as calls not to exclude an outsized initial move grow.
Mr Simkus spoke on the sidelines of the ECB’s annual retreat, where officials are meeting against a backdrop of surging prices, threats to economic growth and the possibility of energy rationing as Russia cuts supplies. Inflation is driven to a large extent by energy and food costs linked to the war in Ukraine. But it’s broadening, and economists predict euro-zone data due Friday will show another pickup, to 8.5%, in June.
It’s set to be presented in the coming weeks and will probably consist of more targeted bond-buying, though purchases may be offset to avoid undermining efforts to fight inflation.