The European Central Bank could begin raising interest rates before pulling back on asset purchases program, ECB policymaker Robert Holzmann said in an interview with Swiss newspaper NZZ, saying a rate change would be possible already in summer.
Euro Zone inflation is at record high in recent months with the ECB has given up its pledge not to raise interest rates this year while several policymakers are openly advocating an end to bond purchases this year, previously stated as a prerequisite for any rate hike.
Holdzmaan noted it was possible ECB to veer away policy guidance of that an interest rate increase would only come “shortly after” quantitative easing ends.
“When it comes to the interest rate outlook, the ECB has always signalled that an interest rate hike should not take place until shortly after the bond purchases have ended,” Holzmann said.
“But it would also be possible to take a first interest rate step in the summer before the end of the purchases and a second at the end of the year. I would favour that.”
“Some of my colleagues would perhaps be even more progressive here, while others would be more cautious,” Holzmann said.
He noted a policy rate of around 1.5% would be a benchmark for neutral monetary policy.
“I think that a key interest rate of very roughly 1.5% in 2024 could be realistic, although that may well shift forward or backward somewhat,” he said.
ECB policymakers will meet in an informal gathering in Paris on Thursday and hold their next policy meeting on March 10.
