Central Banks
Energy ‘Subsidy War’ Risks Steeper ECB Rate Hikes, Wunsch Warns
- Deposit rate of 3% not unreasonable given the price outlook
- Dollar appreciation is still a worry, Belgian official says
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Governments’ efforts to ease the energy crisis risk forcing the European Central Bank to raise interest rates more aggressively as it battles record inflation, according to Governing Council member Pierre Wunsch.
It’s already “reasonable” for the ECB to lift borrowing costs to 3% from 0.75% now to tame prices, the Belgian central bank chief said in an interview in Washington. A “subsidy war” where states distribute aid to energy-intensive firms would add to the pressure, he said.