European Central Bank Governing Council member Pierre Wunsch said interest rates may eventually have to top 3% to get record inflation under control.
“My bet would be it’s going to be over 2%, and I would not be surprised if we have to go to above 3% at some point,” Wunsch told CNBC in an interview in Washington.
Wunsch also said:
The ECB’s deposit rate, currently 0.75%, will “most probably” need to exceed 2% year-end
“Frankly on the basis of our base case, which is now more or less a technical recession in Europe, I think we are going to have to go real positive somewhere”
“We’ve been claiming that what happens in Europe is different from the U.K., from the U.S. But over the last six months basically the direction we’ve been taking was not that different”
The ECB’s rate peaked at 4.25% in 2008. That suggests the anticipated peak of hiking, at 3%, will be well below that 2008 peak. That’s only relevant because the Fed Funds rate could exceed its 2007 peak at 5.25% before this hiking cycle has ended. That raises the question why is the Euro rebounding?Click HERE to subscribe to Fuller Treacy Money Back to top