Call from ECB Board Member Panetta for timely intervention in interest rate reduction
Fabio Panetta, Member of the Board of Directors of the European Central Bank (ECB) and Governor of the Bank of Italy, called on the ECB to make timely and small-scale interest rate cuts.
Panetta, President of the Bank of Italy, called for timely and small-scale interest rate cuts to stop the risk of long-term economic stagnation in the Euro Zone.
The ECB has clearly signaled that it will start reducing borrowing costs in June after inflation fell slightly above the 2 percent target. However, investors began to doubt the ECB’s determination to continue on this path.
In his speech at the ECB conference, Panetta drew attention to the importance of taking timely action.
“Small-scale interest rate cuts will meet weak demand and can be paused in case of upward shocks to inflation,” said Panetta, adding that large-scale interest rate cuts could harm the credibility of the ECB.