Panetta advocates small ECB rate hikes amid falling inflation

LONDON, Feb 16 (Reuters) – The European Central Bank is expected to start raising interest rates in small increments and avoid committing to future moves as eurozone inflation falls and rate hikes changes are taking effect in the economy, Fabio Panetta, a member of the monetary institution’s board of directors, said Thursday.

“Now that rates are moving into tight territory, what matters is the extent and duration of monetary policy tightening,” Panetta said at an event in London.

“By smoothing our policy rate hikes – that is, moving in small steps – we can ensure that we calibrate both elements more accurately in light of incoming data and our reaction function.”

The Italian member of the ECB board also said that headline inflation in the eurozone could fall below 3% by the end of the year if lower energy prices continue. .

(Reporting by Marc Jones; Writing by Francesco Canepa in Frankfurt; Editing by Balazs Koranyi; Editing in Spanish by Darío Fernández)