ECB Wants Less Aggressive Rate Hikes

Although there are growing arguments in favor of the European Central Bank behaving less forcefully than in recent months, interest rates should still be raised, reported Reuters on Wednesday, citing Ignazio Visco, the governor of the Bank of Italy.

The ECB has increased rates 200 bps in total since July, the fastest monetary policy tightening on record. According to stated market forecasts, the path is just over halfway complete, and the next move will be a rate increase of 50 or 75 bps in December.

Visco, a member of the ECB’s board, said during a lecture in Rome that « the need to continue tight policy… is evident, albeit the arguments to take a less forceful strategy are increasing. »

He stated that additional decisions should be based on economic data and evidence and advised against the risk of predetermining the course of monetary policy in advance.

Expectations for long-term inflation in the eurozone are « firmly in check, » he added.


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