European Central Bank policymaker Gediminas Simkus has forecast that officials will implement at least one more interest rate hike.
“A 25-basis-point hike was delivered a week ago. If you ask me whether that is sufficient or if it's the end, I certainly think this hike was too small to address rising inflation,” said the Lithuanian central bank governor on Wednesday. “As for when the next hike will come, I may not be able to answer, but I clearly believe the likelihood of at least one more hike is greater.”
He also stated during a press conference in Vilnius:
“The impact of rising energy and other raw material prices has already been transmitted to the market. I would also add that short-term inflation expectations have risen, and expectations for price increases are evident. Therefore, we must ensure that changes in short-term expectations do not evolve into changes in long-term inflation expectations.”
“Currently, oil prices remain high. It's true that they have retreated, but they are still high, much higher than before.”
“We are currently in a baseline scenario; perhaps there will be some hints, and the tone may soften slightly. But can we say the same a week from now? We will have to wait and see. The lesson we have learned from the past is that we should not jump to conclusions. We need to be flexible, maintaining a grasp of the overall direction while being prepared to respond to unexpected developments.”
“A single 25-basis-point rate hike is not enough to control inflation expectations or inflationary pressures. The economic situation is sluggish; those price shocks have been transmitted into the economy, prices have not yet returned to previous levels, and inflationary pressures remain high.”
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