The European Central Bank will be ready for an interest rate hike early next year after ending the remaining bond purchases by the end of this year, Governing Council member Klaas Knot said on Thursday.
“All switches are on track to end the remaining bond buying by the end of next [this] year — and when that’s done, the policy rate can go up early 2023,” he told the Dutch Trouw in an interview.
Asked if his colleagues in Frankfurt have a similar time frame in mind, Knot said: “We’ll have to see, but I do think so. A lot will depend on how the economy will develop next [this] year, a year is long.”
Earlier last month, the bank confirmed that it would wind down its COVID-19 pandemic bond-buying program, but temporarily expand an older quantitative-easing program to cushion the transition.
Knot’s sentiment was echoed by his fellow Governing Council member Robert Holzmann, who heads Austria’s central bank and has a similarly hawkish stance.
“The decisive factor in the new year will be to gradually initiate the exit from negative interest rates and unconventional monetary policy and to avoid any proximity to monetary state financing,” Holzmann said in a year-end statement on his institution’s Web site.
The European Central Bank has had a negative deposit rate since 2014.
Money markets are wagering on at least 10 basis points of hikes from it in December this year, based on euro short-term rate pricing.
Other major central banks are tightening monetary policy more quickly.
The US Federal Reserve has doubled the pace of its stimulus exit, while the Bank of England last month delivered a surprise rate hike — the first among major central banks since the pandemic struck — citing “more persistent” inflation.
The Omicron variant of SARS-CoV-2 is likely to have little influence on prices this year for the time being, but if the impact is bigger, the European Central Bank is ready to change its policy faster than currently planned, Knot said.
Speaking in a separate newspaper interview published in Germany’s Boersen-Zeitung, Knot said that “inflation can go either way because of Omicron.”
“Further supply bottlenecks would be inflationary,” he said. “Temporary declines in aggregate demand would initially put downward pressure on inflation. We have to monitor and remain vigilant.”
The governor of the Dutch central bank told the Dutch Trouw that he sees the risks of persistent inflation slightly stronger than the Frankfurt-based monetary authority.
Several policymakers cast doubt on the likelihood of inflation slowing to exactly 1.8 percent next year and in 2024 as the European Central Bank forecasts.
Still, Central Bank of Italy Governor Ignazio Visco said in an interview with La Stampa that the risks to the European Central Bank’s inflation estimates “are not only upwards.”
Apple Inc has closed in on an agreement with OpenAI to use the start-up’s technology on the iPhone, part of a broader push to bring artificial intelligence (AI) features to its devices, people familiar with the matter said. The two sides have been finalizing terms for a pact to use ChatGPT features in Apple’s iOS 18, the next iPhone operating system, said the people, who asked not to be identified because the situation is private. Apple also has held talks with Alphabet Inc’s Google about licensing its Gemini chatbot. Those discussions have not led to an agreement, but are ongoing. An OpenAI
INSATIABLE: Almost all AI innovators are working with the chipmaker to address the rapidly growing AI-related demand for energy-efficient computing power, the CEO said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reported about 60 percent annual growth in revenue for last month, benefiting from rapidly growing demand for artificial intelligence (AI) and high-performance computing applications. Revenue last month expanded to NT$236.02 billion (US$7.28 billion), compared with NT$147.9 billion in April last year, the second-highest level in company history, TSMC said in a statement. On a monthly basis, revenue surged 20.9 percent, from NT$195.21 billion in March. As AI-related applications continue to show strong growth, TSMC expects revenue to expand about 27.6 percent year-on-year during the current quarter to between US$19.6 billion and US$20.4 billion. That would
‘FULL SUPPORT’: Kumamoto Governor Takashi Kimura said he hopes more companies would settle in the prefecture to create an area similar to Taiwan’s Hsinchu Science Park The newly elected governor of Japan’s Kumamoto Prefecture said he is ready to ensure wide-ranging support to woo Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to build its third Japanese chip factory there. Concerns of groundwater shortages when TSMC’s two plants begin operations in the prefecture’s Kikuyo have spurred discussions about the possibility of tapping unused dam water, Kumamoto Governor Takashi Kimura said in an interview on Saturday. While Kimura said talks about a third plant have yet to occur, Bloomberg had reported TSMC is already considering its third Japanese fab — also in Kumamoto — which would make more advanced chips. “We are
Huawei Technologies Co’s (華為) latest high-end smartphone features more Chinese suppliers, including a new flash memory chip and an improved chip processor, a teardown analysis showed, pointing to the progress China is making toward technology self-sufficiency. The inside of Huawei’s Pura 70 Pro was examined by online tech repair company iFixit and consultancy TechSearch International, finding components made by Chinese suppliers. The firms also found that the Pura 70 phones run on an advanced processing chipset made by Chinese chip foundry Semiconductor Manufacturing International Corp (SMIC, 中芯) called the Kirin 9010, which is likely a slightly improved version of the advanced chip