European Central Bank dove says rate hike may come during the third quarter

European Central Bank dove says rate hike may come during the third quarter

European Central Bank Governing Council member Ignazio Visco has added his voice to heated discussions on when the ECB will begin to raise its benchmark interest rate.

Rates in the euro zone have been negative following the region’s sovereign debt crisis, and the ECB has confirmed that it will conclude its net asset purchases in the third quarter — opening up the possibility of a rate hike.

Some market participants are anticipating a July rate hike, with reports than more hawkish members of the ECB are keen to raise rates sooner rather than later.

Visco, the governor of the Bank of Italy and a notable “dove” — who tend to favor more supportive monetary policy — told CNBC Thursday that it’s “very likely” asset purchases will end in June, leading to the issue of what to do with rates.

“We said that they will be adjusted sometime after the end of the purchasing program; now this sometime has to be defined, we have to look at the developments, it may be during the third quarter or at the end of the year, but it has to be gradual,” he said.

“As we said there are three main conditions that we are looking for: the first is gradualism, the second is optionality and the third, we have to guarantee smooth functioning of financial markets that these flexibility is necessary.”

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