ECB’s Lautenschlaeger Sees Possible 2019 Rate Hike on Inflation

The European Central Bank may increase interest rates next year if inflation picks up, executive-board member Sabine Lautenschlaeger said in an interview with Deutschlandfunk radio.

While Lautenschlaeger “hopes and expects” there will be a rate change in 2019, it depends on the inflation data in the first and second quarter, she said in an excerpt of an interview to be aired on Sunday, according to Reuters.

German inflation slowed more than expected in December to the weakest in eight months, signaling a sustainable pickup in price growth remains elusive for the ECB as it tries to unwind stimulus measures. Consumer price growth in the euro area slipped to 1.9 percent in November, the least since May.

Since the ECB’s Governing Council devised plans in the summer to halt quantitative easing by the end of the year, the economy has showed signs of weakening momentum. Output contracted in two of the region’s three largest economies in the third quarter, and confidence in a strong rebound has diminished amid trade tensions, the threat of a no-deal Brexit and Italy’s fiscal troubles.

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