ATHENS: The European Central Bank must raise interest rates more gradually given the economic growth slowdown in euro zone economies, Greek central bank chief Yannis Stournaras said on Monday.

The ECB has been raising rates at its fastest pace on record but has not yet seen the euro zone inflation rate fall to anywhere near its 2% target, although it has dropped sharply in recent months.

“Given the high uncertainty, ongoing geopolitical and macroeconomic turmoil, and volatility in the markets, it is very difficult to accurately predict the level at which interest rates need to be set,” Stournaras, an ECB governing council member, was quoted as saying in an interview with Kathimerini newspaper.

“In my opinion, the adjustment of interest rates needs to be more gradual, taking into account the slowdown in growth of the euro area economy,” Stournaras said.

Annual inflation in the euro zone fell from 10.6% in October to 9.2% in December, but price growth is expected to accelerate again in early 2023 before what is set to be rapid disinflation over the course of 2023.

Euro clears 9-month peak as ECB hawks let fly

The ECB in December promised a steady pace of rate hikes in the months ahead, at 50 basis points apiece rather than the 75 basis points in September and October.

On Monday, Slovak Central Bank Governor and ECB policymaker Peter Kazimir said the ECB should deliver two more interest rate hikes of 50 basis points each despite inflation easing.

Economists polled by Reuters expect the bank to deliver 50 basis point interest rate rises at each of its next two meetings.

Worryingly, though, analysts say the ECB’s policy signals don’t seem to convince investors any more, whether it is trying to raise their expectations for interest rates or lower them.