Italy’s Central Bank Chief Is Pissed Off At His Chatty ECB Colleagues!

Italy’s central bank chief Ignazio Visco criticizes interest rate comments by his colleagues on the ECB‘s possible further tightening course after March. He openly criticized his hawkish colleagues for making statements when officials had agreed not to give such guidance.

Uncertainty is so great that the European Central Bank (ECB) Governing Council, which decides on interest rates, has agreed to decide from meeting to meeting without giving any forward guidance, Visco said Wednesday at an event in Rome. “For this reason, I don’t appreciate comments from my colleagues on future and continuing rate hikes,” the Governing Council member said.

ECB President Christine Lagarde did reiterate the central bank’s intention to raise rates again by 0.50 percentage points at its March 16 meeting a few days ago. What will come after that is still unclear. However, some monetary watchdogs have already given signals to this effect.

For example, Austria’s central bank chief Robert Holzmann said in a newspaper interview on Tuesday that he expects a series of interest rate hikes this year in view of continued high inflation. Last week, Bundesbank President Joachim Nagel expressed that further significant interest rate steps might be necessary beyond March.

There have also already been voices from the ECB Executive Board on the possible course of action after March. ECB Chief Economist Philip Lane, for example, said in a speech on Tuesday that current data suggest it will be appropriate to raise key rates further then.

According to Visco, the ECB should take a sighted approach to fight against high inflation. While monetary officials have managed to stabilize inflation expectations, he said, developments are difficult to predict due to geopolitical uncertainties. “Monetary policy must therefore continue to proceed with prudence and be guided by the available data,” the Banca d’Italia Visco governor added.

The euro central bank has already raised key rates five times quickly by 3.00 percentage points since the July 2022 rate turnaround. The key deposit rate on the financial markets, which banks receive from the central bank for parking surplus funds, is currently 2.50 percent. Experts expect the ECB to peak at around four percent by the end of the summer as it tightens interest rates.

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