ECB’s hawk Lautenschlaeger still sees rate hike in 2019 if data allows

FRANKFURT (Reuters) – The most prominent hawk on the European Central Bank’s board still expects an interest rate hike in 2019 but concedes that this will depend on inflation data in the first half of the year.

With the euro zone’s economy losing steam, investors have pushed out their bets on the first ECB rate hike since 2011, which is now only priced in for some time in 2020.

Sabine Lautenschlaeger, a German who has long called for the ECB to tighten its ultra-loose policy, still hopes for a move next year if data allows.

“It depends on what kind of inflation data we get in the first and second quarter of 2019,” Lautenschlaeger said in an excerpt of an interview with German broadcaster Deutschlandfunk to be aired on Sunday.

She added that she hoped and assumed a rate change would come next year.

Data on Friday showed German inflation slowed sharply in December, just as the ECB prepared to dial back its stimulus.

The ECB has this month stopped its massive money-printing program after nearly four years and some 2.6 trillion euros ($3.0 trillion) spent buying bonds. But it plans to reinvest cash from maturing paper for a long time after the first rate hike.

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