DUBLIN, Feb 16 (Reuters) - The European Central Bank
still has a way to go to sustainably return inflation to its 2%
target and its credibility - and ultimately its independence -
is at stake, ECB Governing Council member Gabriel Makhlouf said
on Thursday.
"There is a risk that trust and credibility in central banks
will take another buffeting from the recent high inflation,"
Makhlouf, governor of the Irish central bank, said in a lecture
at the London School of Economics.
"And, while headline inflation has declined from its
end-2022 highs, in part thanks to lower energy prices, I believe
we still have a way to go to return inflation sustainably to our
2 per cent target."
Locked in a fight against inflation, the ECB has embarked on
its steepest ever run of interest rate hikes, which is set to
continue next month and likely even after. Makhlouf earlier this
week said the ECB could raise rates above 3.5% from the current
2.5% and likely will not cut them again this year.
In his speech, Makhlouf warned that central bank
independence "is not just given, it has to be earned and
maintained. This means delivering on our price stability mandate
in the first instance, and also communicating clearly the
rationale for our policies."
"Trust and credibility, painstakingly built over time, can
be destroyed quickly," he said.
(Writing by Conor Humphries; Additional reporting by Balazs
Koranyi; Editing by Hugh Lawson)
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