LISBON (Reuters) -The next increase in interest rates by the European Central Bank could be smaller than the record 75 basis-point-hikes decided at its last two meetings, policymaker Mario Centeno said on Monday.
With the inflation rate in double digits, the ECB has raised interest rates by 200 basis points in just three months from record low levels.
Speaking at a conference in Lisbon, Centeno said the ECB had to reverse the trend of rising inflation and could not let it become entrenched in the economy.
Asked whether he thinks the ECB should raise interest rates by less than 75 basis points, Centeno said: “I don’t like to talk about increases before (meetings)…(but) I think there are many conditions for the rates increase to be less than that number”.
His view appeared to coincide with that of the bank’s chief economist Philip Lane who said in an interview published earlier on Monday the ECB would raise interest rates again in December and next year to fight inflation, but those increases may well be smaller than the most recent ones.
Centeno noted that “rates in Europe continue to be roughly half those in the United States”, calling it a good indicator of the difference between the two regions’ economic fundamentals.
He also called for restraint in wage increases and company margins as this “could help the ECB a lot in combating inflation”.
(Reporting by Sergio GoncalvesWriting by Andrei KhalipEditing by Peter Graff)