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The ECB should raise interest rates in September and then pause

The ECB should raise interest rates in September and then pause

FRANKFURT (Reuters) – The European Central Bank is expected to raise interest rates next week, perhaps for the last time.

Slovakia’s governor Peter Casimir says this, a few hours after the start of press silence by the ECB’s advisers in light of the meeting scheduled for September 14th.

The European Central Bank has raised interest rates at each of its last nine meetings and central bankers are now debating whether to raise the deposit base again to 4% or hold off instead as worsening growth prospects add to recession fears.

An openly conservative, Casimir sees another rate hike as necessary, as inflation remains high and inflation expectations are well above the ECB’s 2% target.

“One option is to take a break in September and, if necessary, to go ahead with another (hopefully final) 25 basis point increase in October or December,” Casimir writes in an article.

“The second option seems preferable and reasonable to me,” he adds, which is to raise interest rates by another 25 basis points next week and then take a break.

According to the Slovak central bank governor, raising rates now would be a “simpler and more efficient solution” that would provide clearer signals to the markets and give more time to check whether inflation is on a sustainable path towards 2%.

(Translated by Luca Fratangelo, Editing by Alicia B)

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