'ECB has to normalise interest rates, be very vigilant'

Eurozone interest rates do not suit the real economy and must rise further, European Central Bank Governing Council Axel Weber said on Friday. "We have to normalise monetary policy, this no longer fits with the real economy, and (normalisation) is necessary to rein in liquidity dynamics," Weber said when answering questions after addressing a ZEW Economics Forum on monetary policy.
Markets, which are pricing in at least two more rate rises by the end of the year, had understood the ECB's message well, he said. "Markets have understood that the ECB will act when necessary - only under this condition can we anchor inflation expectations."
Weber earlier this week had said that the ECB should turn its inflationary vigilance into action and raise interest rates again. The ECB hiked by 0.25 percentage points on June 8 to 2.75 percent, its third tightening in six months. Markets expect another two increases this year.