MNI INTERVIEW: Bar To ECB Hike Low, But Data Lacking-Pelagidis

The bar to a European Central Bank rate hike in April will be low, but policymakers may opt at the meeting later this month to wait for more data on the Iran conflict and its impact, one of the Bank of Greece's two deputy governors told MNI.

The ECB's Governing Council may need more time to assess how rapid geopolitical developments are feeding into prices and “convert them into a clear policy guideline,” Theodore Pelagidis said. 

While bar to an April hike may be comparatively low, Pelagidis said “My feeling is that they might need more evidence before they proceed to a rate hike.”

Pelagidis responded in writing to emailed questions sent last week, when markets priced in up to 81 basis points of hikes by December.

“I think that markets are pricing more the idea that the Governing Council wouldn’t like to be accused of being ‘behind the curve’. However, I believe that the Governing Council is well aware of this danger. I cannot see how rates can be around 3% by the end of 2026 with a close to 0.5 growth rate -the stagflation- scenario.” (See MNI ECB WATCH: War Moves ECB From 'Good Place' To 'Good Base')