ROME - The European Central Bank's interest rates may be close to the level required to contain inflation, a policymaker said on Friday, adding that the peak expected by markets "is an important reference point" for the central bank.
The ECB raised its key deposit rate by 25 basis points on Thursday, bringing the benchmark for borrowing costs in the 20-country euro zone to 3.25%.
Asked what level the central bank wants to reach before stopping the rise in the cost of money, Ignazio Visco, the governor of the Bank of Italy, said: "It is perhaps not too far from where we are today."
He was speaking at a book presentation.
Money market prices show investors expect another 25 bp increase in the deposit rate next month, which would take it to 3.50%, but are less convinced the ECB will hike again after that.
The interest rate peak, or "terminal rate" is currently priced in at 3.65%, likely meaning that most investors expect the ECB to raise the deposit rate to 3.75% but a sizeable minority see it peaking at 3.50%.
The ECB is then expected to start cutting rates as soon as early next year.
(Reporting by Giselda Vagnoni, editing by Gavin Jones)