The European Central Bank will have to raise interest rates several more times to tame price pressures, even if headline inflation is now close to its peak, ECB chief economist Philip Lane told the Milano Finanza.
"We do expect that more rate increases will be necessary, but a lot has been done already," the paper quoted Lane as saying on Tuesday. "I would be reasonably confident in saying that it is likely we are close to peak inflation."
This points to a 50-bps hike in the ECB's 1.5% deposit rate on Dec. 15 before a string of further moves in 2023 that could carry the deposit rate to the vicinity of 3%. "We should take into account the scale of what we have already done," said Lane, who makes policy proposals for the rate-setting Governing Council. "So the basis for the decision will be different."
"Given the significant increase in prices, I don’t rule out some extra inflation early next year," Lane said. "The journey of inflation from the current very high levels back to 2% will take time."
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