Brussels: European Central Bank Governing Council member Klaas Knot said he supports an interest-rate increase of as much as 75 basis points at next month’s meeting.
“The inflation problem in Europe at the moment is so big that I think our job is to raise interest rates every six weeks until the inflation picture stabilizes around 2 per cent,” Knot, an ECB hawk, said in an interview with Dutch broadcaster NOS.
Knot said European central bankers are considering raising interest rates faster to tackle high inflation. He called for a rate hike of at least 50 basis points in September, echoing fellow Council member Robert Holzmann, who voiced concern that upward price pressures are becoming entrenched.
In the face of record inflation, the ECB raised rates for the first time since 2011 last month, opting for a half-point hike that was bigger than analysts expected. With data due next week set to show euro-area prices jumped by 9 per cent in August - another all-time high - pressure is building for tougher action, akin to that deployed by the Fed.
Traders are currently assigning an almost 50 per cent likelihood of the next rate move being more than 50 basis points. European bonds slumped Friday on the prospect of a three-quarter-point hike.
“We really need to focus on inflation and take the consequences for our economic activity for a while,” NOS cited Knot as saying.