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HomeEconomyECB should tighten 'gradually', says chief economist

ECB should tighten 'gradually', says chief economist

(Bloomberg) — The European Central Bank should gradually raise interest rates so households and businesses can adjust, Chief Economist Philip Lane said.

Ryan told Spanish state broadcaster TVE on Tuesday that although the ECB would make no sense to adjust interest rates all at once, it would still lift borrowing costs from current levels that are too low.

The comments are similar to those he made on Monday and reiterated his apparent opposition to the call by some officials for a 75 rate hike at next week’s policy meeting. The European Central Bank is facing the twin challenges of record inflation and the growing likelihood of a recession in the 19 country’s euro zone.

ECB staff forecast lower demand in the second half as the economy slows 2022 – despite rising energy costs, which should dampen inflationary pressures, Lane said. While output may contract for “some” weeks, Europe is far better off facing a slowdown than 2008, with low debt and a healthy financial system, he said.

(Updated with Lane’s comment throughout.)

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