ECB’s Guindos says rate hikes to persist at ‘similar pace’

Bloomberg

European Central Bank (ECB) Vice President Luis de Guindos said increases in borrowing costs will continue at a pace similar to the latest half-point move as officials try to tame soaring prices.
The ECB will raise interest rates until projections show that unprecedented euro-area price gains are headed back to the 2% target, Guindos told an event in Madrid. Action taken by officials to date isn’t sufficient to achieve that goal, he said.
“We have to take additional measures to increase interest rates at a speed similar to that of this last 50 basis-point increase,” Guindos said.
While policymakers delivered a smaller rate hike last week than the previous two, they said the advance in borrowing costs is far from over with inflation still at more than 10%. The hawkish tone prompted economists and investors to lift their forecasts for how far the ECB will push.
There was more evidence of the ECB’s tough stance, with Lithuanian central bank chief Gediminas Simkus saying he has “no doubt” there’ll be another half-point hike at the next rate meeting, in February.
“We’re only coming back to neutral rates,” he told reporters in Vilnius. “Up until this point we were still at accommodative monetary policy.”
Slovakia’s Peter Kazimir, meanwhile, said bringing inflation under control will require not only that rates move to levels that restrict the economy, but that they stay there “much longer.”
“The temporary cooling of the economy won’t be sufficient to calm price growth and gradually return to the desired levels,” he said in a statement. “For us, this means we need to increase the base interest rate significantly higher than today.”
Numbers from Germany backed that view, suggesting the recession in Europe’s largest economy may be milder than many had fears just weeks ago. A gauge of business expectations released by the Ifo institute increased for a third month.