April 25, 2022 | 1:05 pmWASHINGTON — European Central Bank policymakers are keen to end their bond purchase scheme at the earliest possible moment and raise interest rates as soon as July but certainly no later than September, nine sources familiar with ECB thinking told Reuters.
“It was just over 2% so in my interpretation all the criteria to raise interest rates have now been met,” one of the sources, who asked not to be named said. ECB President Christine Lagarde on Friday said that bond buys should end early in the third quarter and a rate rise this year is likely.Nearly all of the sources said that they see at least two rate hikes this year, but some argued that a third is also possible, although highly dependent on how markets digest its moves.
The policymakers who spoke to Reuters, however, said that normalization should mean returning to the neutral rate of interest, which neither stimulates nor holds back growth.“Getting to this level by the end of 2023 could be reasonable,” a fifth source said. The ECB last raised interest rates in 2011 on the eve of the bloc’s debt crisis, a move now widely considered its biggest policy mistake to date.