By Sergio Goncalves and Andrei Khalip
LISBON (Reuters) – The European Central Bank is expected to slow the pace of interest rate hikes from December and send a clear message that record highs of 75 basis points are not the norm as inflation is expected to peak this quarter. , ECB official Mario Centeno told Reuters.
The ECB has raised rates by 75 basis points at each of its last two meetings, raising its deposit rate by 200 points from historic lows to 1.5% in just three months.
“We are approaching interest levels that we consider compatible with price stability in the medium term, which means that the idea that 75-point hikes are the norm cannot materialize,” said Centeno, who is president of the Banco de Portugal.
“It’s important to end this cycle of increases reliably, and more important than the number (of the rate increase) itself is to convey this narrative to the public… We are really trying to convey this predictability about the future and I hope that the meeting of December be very clear about that.”
He declined to predict whether interest rates will rise by 50 or 25 basis points, or whether further increases will be needed next year.
Euro zone inflation stood at 10.6% in October year-on-year, more than five times the ECB’s 2% target, but Centeno said the data pointed to a spike in inflation this quarter. He cited World Bank estimates that prices for energy, minerals, food and fertilizers will fall next year.
(Reporting by Andrei Khalip)
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