Bank of Italy Governor Fabio Panetta
said Tuesday that the European Central Bank's "restrictive'
monetary policies are no longer necessary" and called on the ECB
to be clearer about its future intentions.
Panetta said in a lecture at Bocconi University that, while
inflation was "close to target", domestic demand was "stagnant"
"We should focus more on the weakness of the real economy at the
moment," he continued.
"Without sustained recovery, there is a risk that inflation will
be pushed below target, opening up a scenario that would be
difficult for monetary policy to counter and should be avoided.
"In short, we need to normalise our monetary policy and move
towards 'neutral' or even expansionary territory".
Panetta added that "the time has now come for the ECB to give
more explicit indications of its intentions" on interest rates,
so that "its communications provide the necessary guidance to
consumers and investors".
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