The European Central Bank must lift borrowing costs further because inflation pressures remain too high, according to Governing Council member Boris Vujcic.
(Bloomberg) — The European Central Bank must lift borrowing costs further because inflation pressures remain too high, according to Governing Council member Boris Vujcic.
“Inflation is falling, but core inflation is stubbornly high,” he told Slovenia’s Delo newspaper in comments published Wednesday. “We have no choice but to continue raising interest rates. We’ll have to do this until we see a change in the trend.”
ECB officials are gearing up for a rate meeting in just over a week at which they’re expected to select between a quarter- or a half-point hike. Final data releases on inflation and bank lending, due two days before the decision, will determine which move they opt for.
“Reducing inflation always comes with some costs due to higher interest rates,” Vujcic said. “But those costs are lower if we do it decisively now, rather than letting inflation build into expectations. Because in this case interest rates will have to stay higher for longer than if we do it sooner and faster.”
–With assistance from Jasmina Kuzmanovic.
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