ECB’s Visco says case growing for less aggressive rate hikes

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ROME — The European Central Bank (ECB) will have to continue raising interest rates but there is a growing case for doing so less aggressively than in recent months, Bank of Italy Governor Ignazio Visco said on Wednesday.

The ECB has raised rates by a combined 200 basis points since July, its fastest pace of tightening on record, and market pricing suggests it is just over halfway done, with the next move in the form of a 50- or 75-basis-point hike coming in December.

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“The need to continue with restrictive policy is … evident, although reasons to follow a less aggressive approach are gaining ground,” Visco, who sits on the ECB’s governing council, said in a speech in Rome.

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He warned against the risk of policymakers being set on a pre-determined path and said future monetary policy decisions must be based on data and evidence.

Long term inflation expectations in the euro zone are “anchored,” he added.

Turning to Italy, he called on Giorgia Meloni’s new government to show “prudence and responsibility” with public finances, while pursuing reforms to raise the country’s growth potential.

Visco said it was “certainly not advisable” for Rome to rely on inflation to rein in a public debt which stood at 150.3% of national output at the end of last year.

The Treasury is targeting the debt ratio at 145.7% this year and 144.6% in 2023. (Reporting by Stefano Bernabei Writing by Cristina Carlevaro Editing by Gavin Jones and Mark Potter)