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Title: ECB's Makhlouf says it is time for Governing Council to act

May 12, 2022 08:01AM ET

By: AnalysisWatch

The governor of Ireland's central bank, Gabriel Makhlouf, joined a chorus of European Central Bank policymakers on Thursday calling on the ECB's governing council to take action to fight inflation, though not necessarily at the same pace as the U.S. Federal Reserve.

ECB President Christine Lagarde finally came out in favor of raising the bank's key interest rate, as it was expected to take action in July.

Most other major central banks have already raised borrowing costs, but the ECB, which has been battling too-low inflation for a decade, continues to pump money into the financial system via bond purchases.

According to a transcript released by the Irish central bank, Makhlouf said in a speech in Dublin, "We have reached the point where we need to act in the Governing Council," Makhlouf said in a speech, calling current inflation rates "worrying."

"Our goal is for inflation to be at 2% over the medium term—the level is currently well above that, and it is time for the Council to end net asset purchases under the asset purchase program next month or in July," he said.

He did not give an exact date for the rate hike, but said it is "realistic to expect that the first ECB rate hike will come soon after the end of net asset purchases and that rates are likely to be in positive territory early next year."

"The era of negative interest rates is coming to an end," he said.

Measures that demonstrate the ECB's commitment to price stability will be critical to anchoring inflation expectations, "he said.

Also on Thursday, ECB colleague and Slovak central bank governor Peter Kazimir wrote on Twitter that he was "ready for a rate hike in July."

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