ECB doves argue for caution in raising rates aggressively

The European Central Bank in Frankfurt, Germany. Some economists have started to warn that the ECB and other central banks like the Bank of England could overshoot by hiking interest rates too aggressively in their fight against inflation and deepen the risk of prolong recessions in the eurozone and in Britain. Picture: Michael Probst/PA

The European Central Bank (ECB) must continue to raise interest rates, but there is a growing case for increased caution in policy tightening after a string of aggressive moves, two key policy doves have argued. 

The ECB has raised rates by a combined 2% or 200 basis points since July, its fastest ever pace of tightening, and it will soon start running down its €8.7 trillion balance sheet by letting debt expire and encouraging banks to repay central bank funding.