European Central Bank (ECB) Governing Council member Ignazio Visco said on Friday, “rate hike bigger than 25 bps could be appropriate in September if medium-term inflation expectations don't improve.”
Key quotes
Pace of further "gradual but lasting" tightening will hinge on data and how they affect inflation prospects.
Markets affected in June by unwarranted perception of "particularly aggressive" monetary policy stance.
10-yr btp/bund spread peak of 250 bps hit in early June is not consistent with Italy’s economic fundamentals.
No signs at present of "dangerous wage-price spiral".
Anchored inflation expectations support view monetary policy normalisation can be gradual.
Market reaction
EUR/USD is extending its recovery from fresh two-decade lows of 1.0072, finding some demand on the above comments.
The pair was last seen trading at 1.0116, down 0.41% on the day.