Latvian central bank governor, and therefore a Governing Council member of the European Central Bank, Martins Kazaks spoke on the weekend in an interview at Jackson Hole.
Specifically on the euro exchange rate:
- said he’s “not happy where the exchange rate has moved”
- because the lower rate further fuels inflationary pressures and the benefit of cheaper exports is diminished by supply chain disruption
On the upcoming ECB monetary policy meeting (September 8), flagging the extent of the rate hike he sees:
- “The increase needs to be strong and significant, and at the current moment, I would say 50 or 75 basis points”
- “at least 50 basis points would be appropriate”
- the pace at which monetary support is removed must be orderly
On quantitative tightening (this is shrinking of the ECB’s balance sheet):
- “The sooner we discuss it, the better it is, but that doesn’t mean -- and this is what I think the market should understand -- it doesn’t mean if you discuss it today, we employ tomorrow,” Kazaks said. “The first thing we need to do is get some policy space with interest rates.”
Info via news wires, Bloomberg and Reuters
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EUR daily chart, its slipped under parity and stalled:
