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MNI BRIEF: Visco Urges ECB Rate Caution After Hikes, Turmoil

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

MNI Rome Bureau | +34-672-478-840 | santi.pinol.ext@marketnews.com
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MNI Rome Bureau | +34-672-478-840 | santi.pinol.ext@marketnews.com
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