The ECB’s challenges are similar to those faced by the UK and the US.

In the fierce battle against rising inflation, Pierre Wunsch, governor of the National Bank of Belgium, said the European Central Bank (ECB) may need to be more aggressive in its interest rate hikes. Speaking to CNBC, Wunsch said it was necessary to push interest rates into positive territory when adjusted to current inflation levels.

He said pushing interest rates into a positive range is what will allow the region’s economy to begin to see real change. Pierre Wunsch says the latest 0.75 percent hike can have no impact on the region’s inflation rate, which was estimated at 10 percent in September and is expected to reach 8.1 percent in fiscal year 2022.

While not sure of the timing or magnitude of the ECB’s interest rate hike, Pierre Wunsch said he would not be surprised if the rate was raised by 3 percent this time.

“We have claimed that what is happening in Europe is different from what is happening in the United Kingdom or the United States. But in the last six months, the direction we’ve been going in wasn’t that different. So my bet is that it will be above 2%, and I wouldn’t be surprised if we were to go above 3% at some point” said Pierre Wunsch at the 2022 annual meetings of the International Monetary Fund and the World Bank Group in Washington.

Europe has been a major inflation hotspot this year, bearing the direct brunt of the war that broke out between Russia and Ukraine in Eastern Europe. Authorities are working to keep that inflation in check, but fears of gas supply shortages from the Russian oil embargo may put additional pressure on the region’s economy.

ECB to raise interest rates with deep market knowledge

It is known that central banks make decisions to steer the economy almost independently, in the case of the ECB, the governor of the Austrian central bank Robert Holzmann revealed that policymakers in the region made a conscious decision to “work with the market, express our views and be more readable.“

“My impression and my knowledge is that the markets are on point,” he said. “Talking with the market, hearing from the market also what they expect for the next meeting, I think it will be at a similar level.“

The ECB’s challenges are similar to those faced by the UK and the US. Inflation is hitting these and other countries in new ways, and while the U.S. is expected to release its latest inflation data today, the direction of the rate hike at the next Federal Open Market Committee (FOMC) meeting will be determined by how far the 8.3% figure for August falls.