ECB’s De Cos sees sequence of rate rises after end of bond-buying in early Q3

MADRID (Reuters) – The European Central Bank will likely start raising interest rates shortly after ending its bond-buying programme early in the third quarter, with the potential for further hikes in coming quarters, policymaker Pablo Hernandez de Cos said.

De Cos said on Wednesday that a gradual withdrawal of the extraordinary monetary stimulus was adequate in the current situation when there are upside risks to inflation projections and core inflation is “clearly” above intermediate-term and medium-term inflation expectations of around 2%.

“In the coming quarters, further (rate) increases could be made to reach levels in line with the natural rate of interest if the medium-term inflation outlook remains around our target,” De Cos said, adding that at this particularly uncertain time, the process of raising interest rates should be gradual.

(Reporting by Jesús Aguado; additional reporting by Emma Pinedo; editing by Balazs Koranyi and Andrei Khalip)