By Gavin Jones
ROME (Reuters) – European Central Bank governing council member Ignazio Visco on Wednesday criticized some fellow policymakers for comments on future interest rates that diverged from what had been agreed at ECB meetings.
Visco’s intervention sets the scene for a heated discussion at next week’s meeting, at which the central bank is due to raise interest rates for a sixth straight time and chart the path ahead in its fight against high inflation.
Visco, like fellow Italian on the ECB executive board Fabio Panetta, is seen as a policy dove, reluctant to commit to aggressive rate hikes fearing they will hurt the economy.
“The uncertainty is so high that as a governing council we agreed that we would decide meeting by meeting, without forward guidance,” the Bank of Italy governor said at a speech in Rome, diverging from a previously distributed written text.
“For this reason I don’t appreciate comments by my colleagues regarding future and prolonged increases in rates,” Visco added, in unusually blunt remarks that highlight a widening rift at the Frankfurt-based ECB.
Visco said that while the ECB had managed to stabilise inflation expectations, geopolitical uncertainties meant economic developments were hard to predict.
“Monetary policy must therefore continue to move with prudence and be driven by data as it becomes available.”
The ECB is raising rates at the fastest pace on record, and its chief economist Philip Lane said on Monday that it is still likely to keep hiking them after a 50 basis point increase this month that has already been virtually pre-announced.
Other governing council members, considered policy hawks who attach overriding importance to curbing inflation even if it means hurting growth and employment, have gone further.
Austrian central bank chief Robert Holzmann said on Monday the ECB should hike by 50 basis points at each of its next four meetings as inflation is proving to be stubborn.
That would take the deposit rate to 4.5%, well above the 4% peak rate priced in by markets, a level no other policymaker has so far advocated in public.
Germany’s Bundesbank chief Joachim Nagel has called for significant hikes beyond March and Klaas Knot of the Netherlands has also said he sees a big rate hike in May if core inflation does not fall.
The ECB has no policy meeting in April.
(Additional reporting by Stefano Bernabei and Alvise Armellini; Editing by Alexander Smith)
