The European Central Bank may have to raise interest rates up to three times this year to combat higher inflation, ECB Governing Council member Robert Holzmann said in an interview with Austrian newspaper Salzburger Nachrichten.
Holzmann said any such rate hikes would still leave borrowing rates significantly below historical averages.
Central bankers worldwide are struggling to corral inflation rates that have surged because of the war in Ukraine and the global pandemic.
“I think it would be appropriate to take at least two or even three steps,” Holzmann said in reference to raising interest rates. “These could be smaller ones, like 0.25 percentage point each. If this were to happen by December, it would have the effect that by 2023 the deposit rates for banks, which are now minus 0.5 percent, would be in positive territory,” said Holzmann, who also is head of Austria’s central bank.
Analysts expect the ECB to possibly start raising interest rates in July amid eurozone inflation currently standing around 7.5 percent.