Comment by Irish central-bank governor could surprise markets who expect interest rates to peak in July and fall after that
Governor of the Central Bank of Ireland, Gabriel Makhlouf, said he could see the European Central Bank raising interest rates higher than 3.5%.
Photo: CLODAGH KILCOYNE/REUTERS
BERLIN—The European Central Bank could increase interest rates above 3.5% and likely won’t cut them again this year as the bank moves forcefully to bring inflation back to target, a top ECB official said.
The ECB raised its key rate to 2.5% this month, the highest level since 2008, and said it intends to raise rates to 3% next month. The eurozone economy looks set to avoid recession this year and employment grew robustly at the end of last year, while underlying inflation is at a record high. Investors expect the ECB to lift rates to a peak of 3.5% by July, before starting to cut them again later this year or early next year.
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