European Central Bank (ECB) Governing Council Member Ignazio Visco said that the European Central Bank is close to reaching the peak in interest rate hikes.
“The market has an opinion on this, and that’s the idea we’re discussing,” Bank of Italy Governor Visco said in Rome on Friday, saying borrowing costs will reach “a level not far from where we are today.”
The ECB cut its tightening rate to a quarter point on Thursday, and ECB President Christine Lagarde said she still expects at least two more increases. On Friday, many officials echoed his comments, from France’s Francois Villeroy de Galhau to Lithuania’s Gediminas Simkus.
Economists expect two quarter points, while the market is pricing in a single increase.
While most economists expect two more quarter-point rate hikes to occur, market-priced options indicate only one rate hike, which would have pushed the deposit rate peak to 3.5 percent.
Visco, one of the ECB’s most dovish policy makers, will complete his 12-year tenure at the helm of the Bank of Italy later this year.
The head of the bank was speaking mostly at the presentation of a new book on “Inflation and monetary policy,” which collects previous work on Italy’s fight against rampant inflation in the decades before joining the euro.
Visco said the Governing Council is not divided into “hawks and pigeons” because all members share the goal of reining in hyperinflation, although they sometimes differ in speed.
The veteran economist summed up his approach by referring to the Spanish slogan “Adelante con jucio”, a quote from the Italian historical novel The Betrothed, meaning “Go on but be careful.”
Ignazio Visco said, “The main thing is that we live in a very uncertain world. We have an idea of where and how we will get there, but for now it’s just an idea, we can’t know the peak interest rate for now.”