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MNI BRIEF: ECB Must Hike With Care, Says Bank of Italy's Visco

(MNI) ROME

The ECB must be careful not to hike too much and crush inflation expectations, the Bank of Italy's governor says.

The European Central Bank could already be at or close to its neutral rate, and should continue hiking with care but only for so long as inflation expectations continue to call for tightening, Bank of Italy Governor Ignazio Visco said in a speech this Friday in Florence.

The neutral rate of interest is somewhere between 0.7% and 1.8%, Visco said, adding that the terminal rate of interest should be found by “proceeding gradually”. High uncertainty calls for prudence in setting future hikes, with a meeting-by-meeting approach based on last available data.

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The European Central Bank could already be at or close to its neutral rate, and should continue hiking with care but only for so long as inflation expectations continue to call for tightening, Bank of Italy Governor Ignazio Visco said in a speech this Friday in Florence.

The neutral rate of interest is somewhere between 0.7% and 1.8%, Visco said, adding that the terminal rate of interest should be found by “proceeding gradually”. High uncertainty calls for prudence in setting future hikes, with a meeting-by-meeting approach based on last available data.

Keep reading...Show less