By Sergio Goncalves
LISBON (Reuters) -The European Central Bank has already made a large part of the necessary rate hikes to contain inflation in the euro zone, which is expected to reach its peak this quarter, ECB policymaker Mario Centeno said on Thursday.
He said the ECB was "committed to act, data dependent" to reduce the pace of price rises because high inflation would have "a greater recessionary cost than the one caused by rising interest rates", but warned against rushed decisions.
The ECB has raised interest rates by a combined 200 basis points over the past three meetings, and markets are pricing in a string of further moves that would take the 1.5% deposit rate close to 3% in 2023.
In an interview with Portuguese newspaper Publico, Centeno said it was "very difficult to say what the highest value of interest rates" will be in the ongoing process of monetary normalization, after a period of abnormally low levels.
"There is an understanding (by the ECB) that a good part of the monetary policy effort that was expected to be done has already taken place ... (but) it is really important that inflation reaches its peak," he added.
He said expectations point to "inflation reaching a peak in the fourth quarter", which if it materialises will offer "a very significant degree of predictability to monetary policy".
Inflation in the euro zone accelerated to 10.7% in October and is expected to stay above the ECB's 2% target through 2024.
"We cannot rush. We are certainly much closer to neutral rate," he told a Bloomberg event later on Thursday, referring to a theoretical rate high enough to tame inflation, but still moderate enough to allow the economy to grow.
While observing some localised demand pressure emerging, he said a recession in the euro area "can be avoided", but it was crucial to keep wage increases and corporate margins under control, and take "targeted, timely and temporary" fiscal support measures to help bring inflation down.