ECB may increase interest rates further to control inflation

• Luis de Guindos has suggested that the ECB may increase interest rates further to tackle inflation.
• The ECB increased interest rates by half a percentage point last week.
• According to sources, that meeting will likely see a 25- or 50-basis-point hike in rates.

According to European Central Bank (ECB) Vice-President Luis de Guindos, who also said that financial markets might be overly optimistic about the inflation outlook, the European Central Bank may increase interest rates further beyond March.

“I would not rule out that there will be further interest rate hikes after March. The fight against inflation is not won,” he was quoted as saying on Wednesday.

“It could well be that financial markets are too optimistic in terms of inflation developments and our monetary policy reaction,” he said.

The ECB increased interest rates by half a percentage point last week and indicated a similar move for next month, but it left options open for its subsequent meeting in May. According to sources who spoke to the media, that meeting will likely see a 25- or 50-basis-point hike in rates.

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