The cure works. And Prime Minister Mario Draghi already yesterday, at a press conference, had made it clear that Governor Visco would announce very positive data on public debt. And so it happened. Ignazio Visco announced, in fact, in his speech at the 28th Assiom Forex congress, that not only Italy grew by 6 and a half percent last year but also that the debt (thanks to growth) was significantly reduced. “The recovery of the Italian economy was decisive in stopping the increase in the ratio between public debt and product which at the end of 2021 could have fallen to values close to 150% (from about 156% at the end of 2020), a clearly lower than expected at the beginning of last year and also lower than the official assessments published in the autumn ». The passage of the governor of the Bank of Italy on the debt had been “anticipated” yesterday by Prime Minister Mario Draghi. The 160% valuation in the autumn was made by the Monetary Fund. The decline – argues the Governor – is the result of the strong negative difference between the average interest burden and the nominal growth of the economy and “clearly shows the importance of economic growth for the pursuit of a gradual reduction in the debt burden. “. In this context, Ignazio Visco pointed out in his speech, “we must begin to think about a future to be consolidated and in which we must all participate with optimism with an attempt to build the new which is actually in our hands”. Now he has said in the face of the pandemic crisis “the Italian economy is better equipped and the banks are not the cause but they have helped”. Of course, on the banking front “cases of fragility remain, but the sector is solid”.
Therefore, the knot of inflation which according to Visco is “essentially a tax” and a brake on the economy and in the eurozone – says the head of the Bank of Italy – is at its peak since the launch of the monetary union. For this reason, the Governor of the Bank of Italy and member of the Governing Council of the ECB, points out that in the light of the jump in energy prices “which will be largely reabsorbed in 2023” the risk “of an un-anchoring of expectations and the start of between prices and wages, of which even at the moment there is no evidence, must be carefully monitored “. The increase in costs, he adds, must not turn into a prolonged inflationary spiral. Visco, in my speech at the congress of financial operators Assiom Forex, adds that the framework underlying the Frankfurt orientation “at the moment I do not think it has changed even if it must be recognized that for the short term the risks of higher variations of the consumer prices and lower dynamics of production ». Visco adds that “in any case, the main response to the rise in energy prices – an obvious, unexpected, supply shock – should not come from monetary policy, especially in the absence of a run-up between wages and prices and in presence of inflation expectations that remain firmly anchored to the central bank’s objective ». Instead, it is budgetary policy that can counteract the inflationary effects of energy costs by compensating, at least to a certain extent, for the loss of disposable income and limiting its effects on the economy. Another hot issue: the increases in bills and the cost of energy. “The increases – says Visco – in the relative prices of energy from fossil sources, necessary in responding to the epochal challenge of climate change, must not occur in an uncontrolled way: they can be dosed through appropriate measures, for example in the context of an appropriate policy tariff “. «However, this signals the importance of quickly defining a strategy, particularly at a European level, which considers the problem of diversifying energy sources, their storage and the identification of common resources for the management of energy crises. Only in this way will it be possible to coherently address a problem that can hardly be solved with economic policies of a conjunctural nature “, underlined the governor.