Euro-area inflation should return to the European Central Bank’s goal if borrowing costs are maintained at their current state for some time, according to Governing Council member Pablo Hernandez de Cos.
(Bloomberg) — Euro-area inflation should return to the European Central Bank’s goal if borrowing costs are maintained at their current state for some time, according to Governing Council member Pablo Hernandez de Cos.
“If we keep rates at these levels long enough, there are very good chances that we will be able to reach our 2% target in a timely manner,” de Cos told a conference in Madrid on Monday. “This approach is particularly important to avoid both insufficient tightening, which would impede the achievement of our inflation target, and excessive tightening, which would unnecessarily damage economic activity and employment.”
After 10 consecutive interest-rate increases, the ECB’s unprecedented tightening campaign is at or at least near its end, shifting focus to keeping borrowing costs durably high to fully squash consumer-price growth.
Data at the end of this week will be key to see the progress policymakers are making in their fight to tame inflation. Still, while slowing, the September reading is expected to be above 4% — more than twice the ECB’s target.
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