ECB’s Visco: Large and Persistent Increases in Interest Rates Must Be Countered
31 May 2021
By David Barwick – FRANKFURT (Econostream) – Sustained and significant rises in yields are not warranted by economic prospects and will have to be countered, European Central Bank Governing Council member Ignazio Visco said Monday.
In his annual keynote speech, a text of which was provided by the Banca d’Italia, which he heads, Visco invoked the global financial crisis as having demonstrated that ‘a premature reduction in monetary stimulus increases risks to the economy and price stability.’
‘Uncertainty about the timing and intensity of the recovery requires that financing conditions remain accommodative for a long time: large and persistent increases in interest rates are not justified by the current economic outlook and will need to be countered, including through the full use of already defined securities purchase programmes’, he continued.
Monetary accommodation is both limiting the impact of the pandemic and supporting a return of inflation ‘to values close to 2%’, he said.
According to Visco, mid-term inflation prospects are still weak, as healthier wage developments are restrained by large output gaps.