Luxembourg's ECB voice expects more interest rate hikes
This article was corrected to show that the European Central Bank meeting resulted in a key interest rate being increased from 0.75% to 1.5%.
The European Central Bank could raise interest rates several more times in the coming months as it tries to knock down inflation, but any related economic downturn should be only "temporary", the head of Luxembourg's central bank said.
Gaston Reinesch, who is also a member of the ECB's governing council, did not specify how much he thought interest rates would increase. The ECB's efforts against inflation would stabilize the economy in the near future and prevent wide-spread hardship from uncontrolled price increases, Reinesch said in an interview with broadcaster RTL on Friday.
The ECB doubled its key interest rate on Thursday to 1.5%, the highest level in more than a decade, as it wrestles against record inflation in the face of a likely recession. Prices across the euro-zone rose by a record 9.9% in September, the EU's Luxembourg-based statistics agency Eurostat said last week.
The ECB-set interest rate for banks will remain stable for the coming months, Reinesch said.
"The most relevant rate at the moment is the one that banks who have their reserves at the ECB receive. And, this one has gone up from 0.75 to 1.5%" Reinesch said.
Thursday's decision by Reinesch and other ECB policymakers in Frankfurt to deliver a second straight three-quarter-point hike was expected by outside economists. The deposit rate was below zero as recently as July.
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