(Bloomberg) -- The European Central Bank is more likely to lower borrowing costs as a next move, rather than raise them further, Governing Council member Yannis Stournaras said in the clearest remarks yet on rates likely having reached their peak.
The Greek official was joined on Thursday by Croatia’s Boris Vujcic in saying this month’s ECB hike was probably the last in an unprecedented bout of monetary tightening — assuming inflation moderates back toward 2% as envisaged.
ECB officials took the deposit rate to 4% last week, saying that this level will make a “substantial contribution” to returning inflation to their target. But in the days that followed, several — including Vice President Luis de Guindos — have expressed hope that additional tightening won’t be needed.
How long borrowing costs will remain where they are is now the key question, with investors penciling in cuts for the spring as the 20-nation euro-zone economy shows increasing signs of weakness, even if a recession isn’t being forecast yet. “Have we reached the plateau?” he said in a speech in Frankfurt. “This cannot yet be clearly predicted. The inflation rate is still too high. And the forecasts still only show a slow decline toward the target level of 2%.”
France Dernières Nouvelles, France Actualités
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