VOT Research Desk
At our December meeting, I believe a minimum rate rise of 50 basis points is necessary, said Gabriel Makhlouf, a member of the Governing Council of the European Central Bank (ECB).
We must be prepared for the possibility that policy rates would become restrictive for a while in 2023. Given the current state of uncertainty, it is premature to discuss the policy rate’s breaking point.
Quantitative tightening involves complicated difficulties. It would be incorrect to blame supply shocks alone for our current inflation issue.
Price pressures are spreading across the entire basket, which increases the likelihood that consistently high inflation will become embedded and supports tighter monetary policy.
An emerging trend that requires close observation is the growing percentage of forecasters who anticipate high rates of inflation. general fiscal policy Stronger action from monetary officials may be required in reaction to high inflation.
Quantitative tightening needs to be done with caution. How fiscal and monetary policy interact is one area on which we need to reflect a little more.
