The ECB eased the pace of its interest rate hikes on Thursday, increasing its key rate by 50 bp to 2%, but stressed significant tightening remained ahead.
“Returning to the 75 bp rise is an event with very low probability…because there is a very obvious approximation to the neutral rate, because of the maturity that the monetary policy already has and the need to be cautious going forward,” he told a news conference.
“In February there is likely to be another 50 basis point rate hike,” Centeno said, referring to the next policy meeting.
He said the range of estimates pointed to a neutral rate “between 1.75% and 2%, a little above 2% but not much above.”
“Every rise in interest rates due to having a restrictive effect must make us think a lot…the risk of overreacting is very great,” he said, noting that the ECB is determined to reduce inflation and that “the decisions will be taken meeting after meeting, dependent on the data available”.
He added that inflation expectations were still anchored and the “predictability of monetary policy will be gained at the time the inflation path reverses.”
Source: Economy - investing.com
