(Bloomberg) — Governing Council member Ignazio Visco said the European Central Bank is close to reaching the peak of its interest-rate hikes.
(Bloomberg) — Governing Council member Ignazio Visco said the European Central Bank is close to reaching the peak of its interest-rate hikes.
Borrowing costs will reach a level that is “not too far from where we are today,” the Bank of Italy governor said in Rome on Friday. “The market has an idea, and that idea is what we are discussing about.”
The ECB slowed its tightening pace to a quarter-point on Thursday, with President Christine Lagarde indicating she still anticipates at least two more hikes. Her comments were echoed by a raft of policy makers on Friday, from France’s Francois Villeroy de Galhau to Lithuania’s Gediminas Simkus.
Most economists anticipate two further quarter-point rate increases to materialize, while market-implied options fully price in only one more hike, which would bring the deposit rate peak to 3.5%.
Visco, one of the most dovish ECB policy makers, will conclude his 12-year spell at the central bank’s helm later this year. He was speaking at the presentation of a new book on “Inflation and monetary policy,” which for the most part collects earlier studies on Italy’s fight against rampant inflation in the decades before joining the euro.
The Governing Council isn’t divided between “hawks and doves” as all members share the same goal of taming excessive inflation even though they sometimes differ over speed, Visco said.
He summed up his approach by citing the motto “Adelante con jucio,” Spanish for “Go ahead but be careful,” a quote from Italian historical novel The Betrothed.
“The fundamental issue is that we live in a very uncertain world,” he said. “We have an idea about where we’ll arrive and how, but for now it’s just an idea, we cannot know the peak rate already.”
–With assistance from James Hirai.
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