There’s no alternative to raising rates: ECB official

Bloomberg

European Central Bank (ECB) Governing Council member Mario Centeno said increases in borrowing costs must persist until inflation is on a sustainable path to
officials’ 2% target.
Despite moderating for two straight months, price gains are “still too high,” Centeno told lawmakers in Lisbon, where he heads Portugal’s central bank.
“How can we respond to this problem?” Centeno said. “We should respond with a monetary policy that has no alternatives for its path other than to carry out the process of normalisation and increasing interest rates that started at the end of 2021.”
The slowdown in record euro-era inflation has failed to reduce policymakers’ appetite for more rate hikes as the concern shifts to persistent underlying price pressures. Despite the most aggressive monetary tightening in the ECB’s history, the region’s economy is coping better than expected: Goldman Sachs now predicts it will avoid a recession.
ECB Executive Board member Isabel Schnabel said earlier Tuesday that borrowing costs must be lifted much further, with inflation only just having dipped back into single digits.
“Rates will still have to rise significantly at a steady pace to reach levels that are sufficiently restrictive to ensure a timely return of inflation to our 2% medium-term target,” she said.
Centeno expressed hope that rates, currently at 2%, won’t have to rise much further.
“We have to believe that we are getting closer to the end of this process of raising interest rates,” he said. “I believe that is true, given that inflation is on this path.”