IMF: ECB should keep interest at 4%

The European Central Bank should keep interest rates at or near 4% through 2024 to curb inflation, the International Monetary Fund said on Wednesday. Rapid wage growth in the euro zone could keep inflation high for longer and the European Central Bank should keep interest rates at or near record highs through next year to counter price pressures. Alfred Kammer, the head of the IMF’s European department, countered expectations of an early rate cut, arguing that the ECB’s deposit rate should remain near a record 4% for the whole of next year. “Monetary policy is appropriately tight and should remain so through 2024. For all intents and purposes, the deposit rate should be kept at or near that level through 2024,” Kammer said in a statement. He warned the European Central Bank not to cut rates too early, saying such a move would require even more costly policy tightening later. The European Central Bank last month broke a streak of ten consecutive rate hikes, raising market expectations that its next move will likely be as soon as April, pricing in a total of 90 basis points of cuts by the end of next year.