© Reuters. Newly appointed Governor of the Financial institution of Italy, Fabio Panetta appears on as he attends a banking convention in Rome, Italy November 30, 2023. REUTERS/Remo Casilli/File Picture
ROME (Reuters) – The European Central Financial institution (ECB) must be cautious to not trigger “unnecessary damage” to the financial system and monetary stability via its rate of interest coverage, new Financial institution of Italy governor Fabio Panetta mentioned on Thursday.
Panetta, a member of the ECB’s governing council, added that the spherical of financial tightening has not but had its full impression and would proceed to dampen demand sooner or later.
In his first main speech since changing into head of the Italian central financial institution, Panetta warned that the euro zone financial system would stay weak within the final three months of this 12 months and that dangers for the financial system had been tilted to the draw back.
“We need to avoid unnecessary damage to economic activity and risks to financial stability, which would ultimately jeopardise price stability,” Panetta mentioned.
Earlier than taking up on the Financial institution of Italy this month, Panetta sat on the ECB’s Frankfurt-based board, the place he was thought-about an rate of interest dove.
The present stage of charges was according to bringing inflation all the way down to the ECB’s 2% goal, he mentioned in Thursday’s speech.
The ECB has lifted charges to a report excessive 4% this 12 months to cease value development however has signalled regular coverage for the subsequent few quarters and markets have began to place for the primary fee reduce, with a transfer seen as quickly as April or June.
