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MNI BRIEF: ECB Will Run Economy Hot To Hit 2% Target - Panetta

MNI (Frankfurt)
(MNI) Frankfurt

Post-PEPP asset purchases should be at a level consistent with hitting new price stability target.

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The ECB should be prepared to "run the economy hot," Fabio Panetta said in an interview Thursday, as he called for asset purchases post-PEPP to be conducted at a level consistent with reaching the new price stability target of 2% over the medium term and ensure even transmission of monetary policy across the euro area. Inflation will fall back as the impact of transitory factors fades out, and rejected suggestions the central bank is falling into the trap of fiscal dominance, he said.

The reintroduction in some countries of social distancing measures could "stymie," rather than derail the recovery, the ECB Executive Board member said, while the epidemiological situation in emerging economies poses an additional challenge. However, the overall impact is likely to be weaker than with previous waves, thanks to changes in behaviour and vaccination campaigns.