ECB’s Cipollone: ‘No Need for Monetary Policy to Generate Further Slack to Keep Inflation in Check’

12 February 2024

By David Barwick – FRANKFURT (Econostream) – European Central Bank Executive Board member Piero Cipollone on Monday said that monetary policy no longer had to create economic slack to get inflation under control.

In remarks at the European Parliamentary Week 2024 in Brussels, Cipollone, according to a text provided by the ECB, said, ‘Supply disruptions have eased and energy prices have fallen, therefore a different combination of macroeconomic policies is required.’

Governments thus ought to discontinue fiscal support to offset high energy prices, though they should still pursue a strategy of diversification to limit the area’s vulnerability to fluctuations in the prices of traditional energy sources, he said.

‘On the other hand, with demand still weak and inflation expectations anchored, there is no need for monetary policy to generate further slack to keep inflation in check’, he continued. ‘The unwinding of supply shocks creates scope for demand to recover without fuelling inflation.