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A cautious approach should guide the ECB's future monetary policy decisions, from a financial stability perspective, after the recent banking turmoil, Bank of Italy’s Governor Ignazio Visco said Thursday. “This does not mean that monetary policy will be subject to financial dominance […] It simply reflects the fact that price and financial stability are two strictly intertwined goals,” Visco said.
The monetary tightening is already the desired impact on credit and money dynamics with growth of loans to firms and household decelerating, and M3 and M1 slowing markedly with the latter turning negative in January, he said. “The fall in money[…] could limit consumption and investment, helping to dampen short-to-medium term inflation expectations," he noted
The data “may call into question the persistence of inflation” and suggest a more gradual monetary normalization, finding the “right balance between two risks” of stopping too early and overtightening, Visco added
Source: ECB
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.