ECB’s Simkus says September pause wouldn’t mean hikes over

EUROPEAN Central Bank Governing Council member Gediminas Simkus said a potential pause in monetary tightening in September wouldn’t indicate that interest-rate hiking is over.

“A pause in September doesn’t mean there won’t be hikes going forward,” Simkus told reporters on Friday (Jul 28) in Vilnius. “Perhaps there will be a pause in September, but we may need to hike again in October.”

Acknowledging that after nine consecutive rate hikes the ECB is “close to a peak or at the peak,” Simkus said he expected rates to then stay high for some time.

“I wouldn’t expect any fast cuts on interest rates,” he said. “I have doubts on cuts in the first half” of next year, Simkus said. “That doesn’t sound like a probable scenario to me.”

Simkus, who heads Lithuania’s central bank, spoke a day after the ECB raised the deposit rate to 3.75% and vowed to be data-dependent for its next monetary policy meeting in September.

“When you’re close to a peak, close to a terminal rate, there are more alternatives for decision making,” he said. “It’s not immediately obvious” whether the Governing Council will need to raise borrowing costs in September. BLOOMBERG