ECB’s Visco: We Will Move Out of Negative Territory, but it Is Not Obvious to Where
20 May 2022
By David Barwick – FRANKFURT (Econostream) – European Central Bank interest rates can move out of negative territory, but the process must be gradual and it is not obvious how far it can go, ECB Governing Council member Ignazio Visco said on Friday.
In an interview with Bloomberg, Visco, who heads the Banca d’Italia, said, ‘Now I think that we can move out of this negative territory for various reasons.’ He cited the recovery of demand to close to pre-pandemic levels and persistently high inflation.
‘And therefore we can move, and we can move gradually, raising interest rates in the coming months’, he said. ‘In June certainly not, because in June, in June we are still purchasing assets, assets for our APP programme, and we will end it.’
The ECB has indicated that a rate hike would come after the end of net asset purchases, he reminded.
‘After that means perhaps July, and gradual means in my, in my view that we have to understand that we should move without creating uncertainty in the market’, he said. ‘So, we should move gradually along the path, which really, on which we really have still to decide where to settle. It is not obvious where. When, it depends very much on the state of uncertainty.’
In other comments on the margins of the G7 meeting of finance ministers and central bank governors, Visco said, ‘I have no problem with exiting, but I think it needs to be more gradual than what some may be thinking.’