ECB’s Wunsch Says Rate Hikes May Continue Even Beyond September

(Bloomberg) — The European Central Bank will have to keep raising interest rates even after September if core inflation doesn’t slow down sustainably by then, according to Governing Council member Pierre Wunsch.

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Without a retreat in the underlying measure of price gains that strips out energy and food, “there’s indeed the possibility that we would hike in September,” the Belgian central bank chief told journalists in Brussels. “If core keeps at 5% on a yearly basis in the coming months, then we’ll keep increasing even beyond September.”

The comments add to hawkish commentary a day after the ECB lifted rates by another 25 basis points and signaled another hike in July is very likely. Bundesbank President Joachim Nagel said there’s more ground to cover and that officials “may need to keep raising rates after the summer break.”

President Christine Lagarde offered little guidance on what to expect after July. While the majority of analysts still expects the ECB to pause after next month’s increase, markets are almost fully pricing another hike beyond that — boosted by a slight upward revision this week in quarterly inflation projections.

While the core measure of price gains slowed in May, Wunsch said this was partly the result of a new public-transportation ticket in Germany. Looking at the numbers in a different way means “they’ve been actually quite stable,” he said.

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