Momentum is building for the European Central Bank to raise interest rates in July to fight soaring inflation, after dovish policymakers indicated they are ready to accept an end to almost eight years of negative borrowing costs.
ECB chief economist Philip Lane and executive board member Fabio Panetta have signalled they are now more open to raising rates in the coming months, following calls from the governing council’s hawks to make the first rise in more than a decade sooner rather than later.
The hawkish shift comes after eurozone inflation hit a record 7.5 per cent in April and brings the ECB closer in line with the Federal Reserve and the Bank of England, which both raised rates this week. However, the eurozone’s monetary policymakers still lag far behind their peers in the US and UK in the cycle of raising interest rates.