MNI BRIEF:ECB Panetta Wants Rates At Neutral, Forward Guidance
MNI (LONDON) - The ECB should lower interest rates to neutral “or even into expansionary territory if necessary” as restrictive monetary conditions are no longer necessary across the euro area with inflation close to target and domestic demand stagnant, Bank of Italy Governo Fabio Panetta said Tuesday.
The current situation allows to return to a normal and more forward looking monetary policy, " in line with our medium-term orientation”, he said, noting that the ECB has entered in a new phase leaving behind the “exceptional circumstances of the past two years” that forced central banks to give less weight to forecasts and to live day-by-day or meeting-by-meeting.
The ECB's communication should provide more guidance on the expected evolution of policy movements as in the past - “In short, we should go ‘back to the future,” he said.