ECB's Visco says central bank close to rate peak

Annnual Meetings of the International Monetary Fund and World Bank in Washington

MILAN (Reuters) -The European Central Bank has nearly reached the level at which it will have to stop rate hikes, Bank of Italy's Governor and ECB Governing Council member Ignazio Visco said on Wednesday.

The ECB has raised rates at each meeting over the past year, taking its deposit rate to 3.75%, and its governing council will meet on Sept. 14 to decide on monetary policy.

Visco said that some in the ECB think that it is better for the central bank to make mistakes by rising rates more than necessary, but added he disagreed with this vision.

"The risk to do too much is clear," he said, calling recent rake hikes a "strong and rapid monetary tightening".

The Italian central banker, who traditionally expresses dovish positions inside the ECB, said the central bank should remain open to react in case of potential unexpected shocks on consumer prices and hinted the ECB could keep its rates stable for some time once the peak is reached.

"Monetary conditions should remain tight enough for as long as necessary to ensure a sustained return of inflation to values consistent with price stability," Visco said.

(Francesca Landini, writing by Alessia Pé, editing by Federico Maccioni and Emelia Sithole-Matarise)