ECB’s Panetta calls for small rate hikes as inflation eases | – #ECBs #Panetta #calls #small #rate #hikes #inflation #eases
LONDON, Feb 16 (Reuters) – ECB board member Fabio Panetta said on Thursday that Europe The Central Bank should start raising interest rates in smaller increments and in the euro zone inflation he should refrain from further steps as he falls.
The ECB raised interest rates by a historically large 50 basis points earlier this month and has already announced another hike of the same size on March 16 as it expands its aggressive fight against high inflation in the euro zone.
But Panetta, a member of Italy’s ECB executive board, urged caution, saying the hikes, which have seen the central bank raise interest rates by 300 basis points since July, have yet to be fully felt by the economy.
“Now that interest rates have moved into restrictive territory, the extent and duration of monetary policy tightening is important,” Panetta said at an event in London.
“By smoothing our policy rate increases, that is, moving in small steps, we can ensure that we calibrate both elements more accurately in light of the input data and our response function.”
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The comments put him at odds with some of his colleagues north of the Alps, such as Holland’s Klaas Knot and the Bundesbank’s Joachim Nagel, who have been clamoring for more, big hikes.
Financial markets of the ECB bank it expects to raise the interest it pays on its deposits from the current 2.5% to at least 3.5% in the summer.
According to his calculations, if the decline in energy prices continues, the main in the euro zone inflation may fall below 3% by the end of the year — down from 8.5% last month.
This is also the ECB’s 3.6% for the last quarter of the current year inflation will be lower than forecast – a stronger euro and lower electricity than when these forecasts were published in December prices owing to.
Panetta also predicted that headline inflation, which has become a key variable in the ECB’s deliberations, will “as a result” fall, and there is no evidence that price expectations are out of control despite rising wages.
He also called for a “measured approach” to the ECB’s unwinding of bond holdings, which Knott and Nagel, among others, want to speed up.
By Marc Jones report; Writing by Francesco Canepa in Frankfurt; Edited by Balazs Koranyi and Sharon Singleton
Our standards: Thomson Reuters Trust Principles.
2023-02-17 01:15:50
Source – reuters
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