(Bloomberg) -- The European Central Bank should consider raising interest rates by half a percentage point if justified by the inflation outlook, Governing Council member Martins Kazaks said. 

A shift in gear to hiking by 50 basis points is “certainly one thing that we could discuss,” Kazaks, the Latvian central bank chief, said in an interview in Riga on Monday. 

Kazaks is only the third ECB official to openly consider a half-point rate hike, following Klaas Knot of the Netherlands and Robert Holzmann of Austria. That would match the pace of the US Federal Reserve, which raised by 50 basis points earlier this month. 

According to their French counterpart, Francois Villeroy de Galhau, a step of that magnitude “is not part of the consensus,” and ECB President Christine Lagarde insisted this week that officials won’t be rushed.

Kazaks said he endorsed Lagarde’s view that monetary policy is likely to exit negative territory by the end of the third quarter, with probably moves of a quarter-point in July and September.

“Do we need to take the step of 50 basis points already in July? Well, we can discuss it, but I think at the current moment, a 25 basis-point step would be appropriate,” he said. “But, of course, there is still some time till the discussions and we are still to see the new forecast.”

The euro held gains against the dollar after the comments, trading near a one-month high of $1.0747 touched earlier Tuesday.

The ECB’s Governing Council is closing in on the first increase in more than a decade to contain inflation running at almost four times its target. The deposit rate currently stands at -0.5% and has been negative since 2014. 

Kazaks indicated that he supports further stimulus withdrawal in the final quarter of the year to bring the rate above zero, saying “I don’t think that zero is a magic number that we need to stop at.” 

“I favor two consecutive rate increases one in July, the other one in September,” he said. “And then we are open for, let’s say one more increase toward the end of the year. All is data dependent.”

ECB officials have repeatedly said that the normalization of monetary policy will happen gradually. But that doesn’t mean it will be “intentionally slow,” according to Kazaks. 

“It can be quick if necessary, the steps can be big if necessary,” he said. “Gradual does not mean that we are by design falling behind.”

Policy makers are walking a fine line at a time when the euro zone is being buffeted by powerful economic headwinds. Russia’s invasion of Ukraine is fanning inflation with higher prices for energy and other commodities, but it’s also slowing growth and denting confidence. 

Kazaks said that the economy doesn’t need monetary support at this point, so the ECB should hike to the natural rate that neither stimulates nor slows down activity. In the past, officials have assessed that level at between 1% and 2% in the euro region. 

With the ECB further away from that than the Fed and the Bank of England, “we can be quite resolute to raise the rates,” Kazaks said. “Normalization means getting back to neutral rates and getting back to the neutral rate of course builds up also policy space for interest rate as an instrument.”

(Adds market reaction in seventh paragraph)

©2022 Bloomberg L.P.