Speaking at the Fed’s annual economic symposium in Jackson Hole, Isabel Schnabel, member of the ECB Council; Francois Villeroy de Galhau, head of the French central bank, and Martins Kazaks, governor of the Latvian central bank, called for strong or significant monetary policy action.
“Both the probability and the cost of the current high inflation taking hold in expectations are uncomfortably high,” Schnabel said. “In this environment, central banks must act strongly.”
Until a few days ago, markets were betting on a 50 basis point move on September 8, but a number of currency leaders, speaking privately and off the record, are now arguing that a 75 basis point move should also be considered.
“Advance rate hikes is a reasonable policy option,” Kazaks told Reuters. “We should be open to discussing both 50 basis points and 75 basis points as possible moves. From today’s perspective, it should be at least 50.”
Rate hikes should then continue, ECB officials argued.
