ECB’s Panetta: ‘Conditions for Monetary Easing are Being Realised’

28 March 2024

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Governing Council member Fabio Panetta on Thursday said that the conditions to start cutting interest rates were materialising as inflation was falling and the risks to price stability had diminished.

Speaking in Rome at the annual meeting of shareholders of the Banca d’Italia, which he heads, Panetta said, ‘The risks to price stability have receded and the conditions for monetary easing are being realised.’

The decrease in inflation was a result of the ECB’s restrictive monetary policy combined with the fall in energy prices, he said.

In the context of the performance of the Banca d’Italia, ‘the implementation of the monetary policy oriented towards price stability has been reflected in the results of the 2023 budget’, he said.

‘Confirming last year's anticipations, the gross result for 2023, before taxes and before the use of the general risk fund, it was negative for 7.1 billion; it had been positive by 5.9 billion in 2022. In addition to the worsening of the interest margin by 11.4 billion, it was affected by the decline, by 3.5 billion, in the net result of the redistribution of monetary income, also a consequence of the restriction monetary policy implemented in the last two years’, he said.

Profits would return in 2025, ‘[b]ased on current monetary policy decisions and expectations on the evolution of interest rates’, he said.