Member of the Governing Council of the European Central Bank (ECB) and the head of the Central Bank of Austria Robert Holzmann said that the ECB can increase rates without waiting for the end of the bond purchase program.
Against the background of a further increase in consumer inflation, the ECB recently signaled the possibility of a rate hike in 2022, but added that such a step would follow after the termination of bond purchases. All ECB policymakers who spoke after the ECB signals followed the same sequence of policy changes, but Holzmann chose a different position.
"The ECB has always signaled that a rate hike will occur only after the completion of bond purchases. But I believe that the rate can be raised in the summer and again at the end of the year, when the bond purchase program is terminated," Holzmann said.
The next ECB meeting is scheduled for March 10, and market participants believe that the ECB will repeat its recent position and signal the termination of bond purchases in the 3rd quarter, which will allow raising the rate by the end of this year.
"The end of the era of negative rates will be an "important signal" for the markets," Holzmann said, and added that he supports two rate hikes by the end of 2022 or the beginning of next year. Holzmann also noted that the rate of about 1.5% will be a benchmark for a neutral monetary policy.