![]() These higher borrowing costs are a particular risk for Italy as investors see the country as especially vulnerable, given its high budget deficit, high debt and lack of fiscal discipline. Stournaras meanwhile noted that borrowing costs had already risen since the ECB's last policy meeting as a result of higher bond yields, so he questioned if even more tightening was needed, whether via fewer bond purchases or higher charges on banks. it's a much better route for our fellow citizens," Villeroy told a conference in Marrakech. "If we can follow a monetary path which ensures a soft landing. With rates already at a record high and inflation on the way down, policymakers appeared to shift their focus to growth, the potential for a recession and fiscal issues. The ECB's models also suggested, according to the accounts, that a deposit rate in the region of 3.75% to 4.00% could bring inflation back to 2%, provided the ECB held this level long enough. While a solid majority backed the increase, there was also a shift in the perception of risk with policymakers seeing risks to inflation more balanced and they also saw a greater balance between the cost of tightening too much and too little. "Erring on the side of pausing the first time the decision was a close call could risk being interpreted as a weakening of the ECB’s determination, especially at a time when headline and core inflation were above 5%," the ECB said. ![]() Those comments came just as the accounts of the ECB's last meeting, published on Thursday, showed that even the last hike was a close call, with tactical considerations tipping the scale towards the increase. Joining an already long list of policymakers suggesting steady rates for now, French central bank chief Francois Villeroy de Galhau and his Greek counterpart, Yannis Stournaras both planed down the need for further tightening, arguing that policy was already in a setting that could lower inflation. The ECB raised its key interest rate to a record high of 4.0% last month but signalled that its 10th hike in a 14-month-long effort to bring down inflation may be its last, at least for now, as the economy was slowing and could even dip into recession. ![]() MARRAKECH/FRANKFURT, Oct 12 (Reuters) - European Central Bank policymakers expressed cautious optimism on Thursday that inflation was on its way back to 2% even without more rate hikes and raised pressure on governments to maintain the sort of fiscal discipline needed for a soft landing of the economy. ![]()
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