ECB’s Panetta Sees Inflation Below 2% for ‘an Extended Period’, Economy ‘Persistently Weak’

18 June 2025

ECB’s Panetta Sees Inflation Below 2% for ‘an Extended Period’, Economy ‘Persistently Weak’
Fabio Panetta, governor of the Banca d’Italia, with Christine Lagarde, president of the European Central Bank, at the ECB Governing Council meeting in Ljubljana on October 17, 2024. Photo by Andrej Hanžekovič/ECB.

By Marta Vilar – MILAN (Econostream) – European Central Bank Governing Council member Fabio Panetta said on Wednesday that inflation was likely to stay below 2% for a long time while the economy remains weak.

In a speech at the Prometeia 50 Conference in Milan, Panetta, who heads the Banca d’Italia, said that the projections ‘for the coming months indicate that inflation is likely to remain below the 2% target for an extended period, alongside persistently weak economic activity.’

The economic outlook was facing ‘substantial and difficult-to-quantify risks’, he added.

These risks were stemming from ‘conflicting signals’ in US trade policies and the escalation of the conflict between Israel and Iran, according to Panetta.

‘Against this backdrop, the ECB’s Governing Council, at its most recent meeting, reaffirmed a flexible approach, keeping its options open’, he said.

The ECB would keep taking decisions meeting by meeting without pre-commiting to a particular path for its monetary policy, he said.

 

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