ECB Chief Economist Philip Lane said in an interview, “our assessment of December remains solid, that we needed a sequence of 50 basis point hikes to bring us inside a zone where we would need to think harder about whether rates are sufficiently restrictive to deliver the return of inflation to 2%.

“The data flow since then suggests that the assessment is solid, that we need another 50 basis points in March,” he said.

Beyond March, “the overall philosophy is that we will bring rates to a level that is sufficiently restrictive, which depends on where the inflation forecast is, where we are with underlying inflation and where we are with the monetary transmission mechanism.”

“There is a zone of interest rate paths that the Governing Council will have to assess in March, in May and thereafter, and determine where in that zone we want to be,” he added.

Without commenting on whether rate will stay at a significantly long plateau, Lane said “I absolutely sign up to the monetary policy philosophy that wherever we get to, we should be slow to come down until we have very strong evidence – not just in the forecast but also in our ongoing assessment of underlying inflation – that we are returning inflation to target.”

Full interview here.

ECB Governing Council member Boris Vujcic told Bloomberg TV yesterday, “as long as core (inflation) persists at the levels we’re talking about and this is significantly higher than our rates are and significantly higher than where are target is, we should persevere.”

The markets have been raising their bets on higher interest rates and are betting tightening extending into 2024. Vujcic said, “I think this repricing in a way is what we did during our last projections, where we projected basically higher inflation for longer, core inflation which turns out to be stickier than most people probably expected.”

“Probably markets are now repricing and saying ‘OK, we might see higher rates for maybe longer,'” he said.

ECB President Christine Lagarde said in an interview, “Interest rates are the most efficient tool in the present circumstances. There is every reason to believe that we will do another 50 basis points in March. After that, we will see. We are data dependent.”

“We will do more hikes if necessary to return inflation to our target of 2% in a timely manner. It will take what it will take,” She added.

“I don’t have a timeline. I have an objective, which is our target. We need to raise interest rates to a level that is sufficiently restrictive to return inflation to 2%, and to keep rates there for as long as necessary to be confident that inflation returns to 2% in a timely manner. That’s the mantra.” She said.

“Hiking rates inevitably dampens demand. And what we’re trying to do is to adjust demand. That’s the mechanical impact that we expect from what we are doing.”

Full interview here.

ECB Governing Council member Ignazio Visco told Bloomberg TV on Saturday, “I don’t think that we can indicate now what the terminal rate will be, not even if it’ll be 3.5%, 3.25% or 3.75%, because really it is data-dependent.

“Our objective is to go back to an inflation rate of 2% in the medium term. If we need to be more restrictive, we’ll be more restrictive,” he said.

Visco said “determined” steps are needed in Q2. “We have to be sure that core inflation isn’t remaining at this high level… This may induce wage increases beyond what is compatible with a medium-term 2% inflation rate, which is our target. So that is why we are observing this with a lot of care — but I’m not worried.”