The European Central Bank (ECB) should be able to gradually normalise its monetary policy without causing an abrupt economic slowdown because long-term inflation expectations remain in line with its price stability target, a top policymaker said.
After a first 25-basis point hike in official interest rates later this month, a larger increase may be warranted in September, the ECB’s Governing Council member Ignazio Visco.
After that, however, economic data will dictate the pace of the further “gradual but lasting” tightening in monetary policy, Visco said, adding there were no signs at present of a “dangerous spiral” between wages and price increases.
