The ECB will soon hike rates for the first time in more than a decade, a member of the central bank’s governing council told CNBC Friday.
The ECB has been in the spotlight for its less aggressive stance on monetary policy compared to other central banks. However, expectations of a rate rise have grown in recent months amid continuous increases in inflation, with market players now pointing to at least four rate hikes before the end of the year.
“We are on the right path,” Joachim Nagel, president of the Germany’s Bundesbank and one of the ECB’s more hawkish members, told CNBC’s Annette Weisbach.
“In our very important meeting in March we decided to end our net asset purchases and in the June meeting, dependent on data, we will decide to stop maybe — and I say this because this data are speaking a very convincing language here — that we stop our purchases and afterwards I believe we will see rather soon the first rate hikes,” he said.
His comments indicate that the first interest rate rise could come in July, once the ECB has debated new economic forecasts released the prior month.
Nagel, who has been in the job since January, said he has been warning about higher inflation since taking on the role, and is now seeing more momentum toward increasing interest rates.
“I pretty much appreciate that many colleagues now from the governing council are joining my position here,” he said.
His comments follow those of Francois Villeroy de Galhau, head of the Bank of France and fellow ECB member, who said he expects a gradual increase in rates from the summer onwards.
Meanwhile, Italy’s Ignazio Visco, the governor of the Bank of Italy and a notable ECB “dove,” told CNBC that a rate hike “may be during the third quarter or at the end of the year, but it has to be gradual.”
