ECB’s Panetta: ‘Our Focus Should Be on the Sluggishness of the Real Economy’

31 October 2024

ECB’s Panetta: ‘Our Focus Should Be on the Sluggishness of the Real Economy’
Fabio Panetta, governor of the Banca d’Italia, at the ECB's Governing Council meeting in Ljubljana, Slovenia, on October 17, 2024. Photo by Adrian Petty/ECB.

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Fabio Panetta on Thursday said that the ECB should concentrate on weak activity, as this threatened to lead to significant undershooting of the inflation target.

In prepared remarks to mark World Savings Day, Panetta, who heads Banca d’Italia, said according to a text provided by his institution that despite three interest rate cuts so far, ‘monetary conditions are still tight and new cuts will be necessary.’

‘As inflation subsides, our focus should be on the sluggishness of the real economy: without a sustained recovery, inflation risks being pushed well below the target, opening up a scenario that would be difficult for monetary policy to counteract and should therefore be avoided’, he said.