“According to some commentators, the Governing Council of the ECB is now moving too aggressively” with its rate hikes. Thus the governor of Bank of Italy Ignazio Visco, in his speech in the room of the parliamentary groups of the Chamber, opening the cycle “Lessons Ugo La Malfa ‘.
“First of all – pointed out the number one of Bank of Italy – (according to the critics, the ECB) is paying excessive attention to current inflation, not taking due account of the fact that monetary policy has its effects on economic activity and on prices with long delays. Secondly, it would be underestimating the possibility that inflation will decline faster than expected following the weakening of economic activity”.
Furthermore, the ECB led by Christine Lagarde would not have “fully assessed the consequences of a synchronized tightening of monetary policies at a global level, which is unprecedented in recent decades. In such an uncertain context, I think it is useful to take these observations into account”. That said, the governor believes that “the path taken is the one necessary to keep inflation expectations anchored and contain the risk of a price-wage spiral that would amplify the negative effects of inflation on our economies”.
Furthermore, there are “some factors” which “reassure us regarding the possibility that price growth will return to the 2% target by the end of 2024, as currently forecast by ECB and Eurosystem experts”.
“Conjectures are being advanced from various quarters – said the number one at Palazzo Koch – on possible levels to aim for, of balance, neutral or natural. But these are levels whose estimate is uncertain to say the least and which, even if they make sense, concern conditions of the economy that are still far from the current ones”.