Two European central bank policymakers have countered market speculation that the ECB will begin cutting interest rates in the first half of next year and undo part of its efforts to combat high inflation.
The ECB ended an unprecedented streak of 10 consecutive interest rate hikes last week, and investors are now weighing the possibility of a rate cut in April, although President Christine Lagarde insists this is too early.
Slovak central bank director Peter Kazimir and his Lithuanian counterpart Gediminas Simkus, two known "hawkish" supporters of tight policy, tried to convey this message on Monday, keeping the possibility of further hikes as a possibility.
"I would be surprised if we have to lower interest rates in the first half of next year," Simkus told reporters in Vilnius.
Kazimir said betting on a rate cut in the first six months of the year was "highly inappropriate" and ECB policymakers should look at the bank's macroeconomic course in December and March. Only then will we be able to say that the tightening measures have been completed and move on to the next phase of monitoring," said Kazimir.
Inflation has so far slowed, with government readings from Germany on Monday confirming expectations for a sharp drop in October, and growth slowing amid signs of a credit crunch caused by rising interest rates.
