Mar 23, 2023
ECB’s Muller Sees More Hiking, But Bulk of Moves ‘Behind Us’
(Bloomberg) -- The European Central Bank will probably need to raise borrowing costs more, though the bulk of tightening is already done, according to Governing Council member Madis Muller.
“Looking at how quickly and sharply the interest-rate increases have taken place in less than a year, I dare say the bigger part of this is behind us and now it is a time for adapting and coping,” Muller told Raadio 2 in an interview Thursday. “We need to get inflation under control, need to keep working until we have confidence that the back bone of inflation is broken.”
Muller, who heads Estonia’s central bank and is among more hawkish policymakers, spoke a week after the ECB hiked by a half point, though — given market turbulence — it held off on providing guidance on what’s next.
Officials are now growing increasingly confident that the euro-zone banking system has withstood financial turmoil, allowing them to envisage resuming interest-rate increases in due course, according to people with knowledge of the matter.
Inflation is a bigger problem than higher borrowing costs, according to Muller. Speaking later on Thursday at TalTech university, he added that he’s “not worried about the banking crisis spreading to the euro area.”
“We know the supervisor has stressed the banks’ resilience in different interest rate scenarios,” he said. At the same time, “capital positions have been improving over the years.”
(Updates with quote from Muller at separate event in fourth paragraph)
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