FRANKFURT: The European Central Bank (ECB) will likely decide at its next meeting to end its stimulus programme in July, and raise interest rates “very soon” after that, ECB policymaker Pablo Hernández de Cos said on Saturday.
The Spanish central bank governor was joining a chorus of ECB policymakers calling for the first rate hike in more than a decade to curb the highest inflation levels since the euro was created and prevent rising prices from becoming entrenched.
The ECB has been lagging global peers in raising borrowing costs and is even still pumping cash into the financial system via its Asset Purchase Programme (APP), the legacy of a decade fighting too-low inflation.
“Now we will end, most likely it will be the decision in our meeting in June … the APP in July,” de Cos told an event organised by Germany’s Bundesbank. “And then we will start to discuss and very soon increase rates.”
Euro zone inflation hit a record 7.5% in April and even measures that strip out energy and food costs have been well above the ECB’s 2% target.
The ECB’s deposit rate is currently -0.5%, meaning banks are charged for parking their idle cash at the central bank. It has been in negative territory since 2014.