“All currently available data lead me to believe that it is very likely we will raise interest rates, and that this September increase will not be enough,” ECB Governing Council member G. Šimkus said in an interview published Tuesday in the magazine “Econostream.”
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“Overall, the inflationary environment has strengthened, so the arguments for raising rates are quite clear. In my opinion, this clearly indicates that we should increase interest rates in September,” he added.
According to G. Šimkus, the need to further tighten monetary policy will be determined by many factors.
“With rising natural gas futures prices, oil prices remaining at levels similar to June, considering the impact of the war in Ukraine on wheat and grain exports from Russia and Ukraine, generally rising agricultural product (wheat, corn) prices, and signs of strengthening and greater resilience in the European economy, this should lead to forecasts that the interest rate curve will rise slightly to maintain medium-term inflation around the 2% target,” the central bank official explained.
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However, he rejected the idea that the ECB will raise interest rates by 50 basis points next week.
As BNS wrote, with the war in the Middle East pushing inflation upward, in June the ECB raised key interest rates for the first time since 2023. At the end of July, the bank did not change them.
At that time, G. Šimkus also said he believed interest rates should be raised in September.
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