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UniCredit CEO Predicts That ECB Will Have “Balanced Approach” on Interest Rates Hikes

Further interest rate hikes by the European Central Bank (ECB) are inevitable, according to Andrea Orcel, CEO of Italy-based banking giant UniCredit. However, Orcel predicts that the ECB will take a “balanced approach” when determining how big the increase will be.

ECB hiked the interest rates by half a percentage point in March and reiterated its intention to continue with hikes in the future if inflation continues to run at the current level.

“I believe that in the end, the (European) Central Bank will take a balanced approach, probably raising rates by more than what ‘doves’ would like, but by less than what ‘hawks’ would,” Orcel said in last week’s interview with Italian media outlet Il Messaggero.

Orcel also added that he expects ECB’s deposit rates to reach their peak in the summer.

After the latest hike, ECB’s interest rate is currently at 3.5%. At the same time, the Eurozone central bank’s deposit has reached 3%.

Many believed that ECB would steer clear of interest rate hikes considering the banking crisis in the United States. However, ECB’s president Christine Lagarde said in March that the move was necessary in order to meet to the goal of bringing eurozone inflation back to 2% by 2025.

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