by Gavin Jones
ROME (Reuters) – Ignazio Visco on Wednesday criticized some of his colleagues on the European Central Bank’s governing council for speaking out publicly about the trajectory they want to see for the monetary institution’s interest rates .
“The uncertainty is so great that we have agreed as a board of governors to decide meeting after meeting, without ‘forward guidance’ (the management of expectations on monetary policy, editor’s note)”, declared the governor of the Bank of France. Italy during a speech in Rome, deviating from the previously transmitted text.
“That’s why I don’t appreciate my colleagues’ comments regarding future and prolonged rate hikes,” continued Ignazio Visco.
If the ECB managed to stabilize inflation expectations, geopolitical uncertainties made the evolution of the economy difficult to predict, underlined Ignazio Visco.
“Monetary policy should therefore continue to act cautiously and rely on available data,” he added.
These remarks, unusually direct, highlight the growing rift between ECB officials.
The governor, like the Italian Fabio Panetta, who sits on the executive board of the ECB, is classified in the camp of the “doves”, in other words the supporters of a more flexible monetary policy to promote growth.
The “hawks” attach greater importance to controlling inflation, even if this should harm growth and employment.
Among them, Robert Holzmann, governor of the National Bank of Austria, said on Monday that the ECB is expected to raise its rate by 50 basis points in March, May, June and July.
The deposit rate would then be increased to 4.5% – from 2.5% currently – a level that no other official has so far advocated in public.
The ECB does not have a monetary policy meeting in April.
Bundesbank boss Joachim Nagel called for significant hikes after the March 16 meeting and Bank of the Netherlands President Klaas Knot also said he was considering a big rate hike in May if core inflation was not falling.
The ECB is raising rates at its fastest pace on record and its chief economist, Philip Lane, said earlier this week that the bank is likely to continue raising rates after next week’s expected half-point hike.
(With Stefano Bernabei and Alvise Armellini, Laetitia Volga, edited by Matthieu Protard)
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