ECB's 'new norm' in interest rate hikes

European Central Bank Vice President Luis de Guindos said that a 50 basis point rate hike could be the new norm in the short term. In an interview with Le Monde newspaper, ECB Vice President Luis de Guindos said that a 50 basis point rate hike for a while to bring inflation under control could be the “short-term norm.” “If we do nothing, the situation will get worse because inflation is one of the important factors behind the current recession,” Guindos said. Expressing concern that the permanence of inflation was being underestimated, Guindos estimated that inflation could fall to 7% by mid-2023. The ECB joined the central banks that slowed down the pace of interest rate hikes at its last meeting of 2022 and continued on its path with a 50 basis point increase after 75 basis point rate hikes.