The reference rates in the Eurozone «are still below the level consistent with the achievement of our inflation objective in the medium term. The need to continue the restrictive action is therefore evident, even if the reasons for implementing a less aggressive approach are gaining ground. So Ignazio Visco, Governor of the Bank of Italy and member of the Governing Council of the ECB who in a lectio magistalis to the Chamber gives an account of the various criticisms recently leveled at the timing of Frankfurt’s monetary policy.
Visco does not agree with those who indicate the presence of equilibrium levels of rates towards which the ECB should aim. According to Visco, on the other hand, today we can do nothing but «move on the basis of evidence, on expectations, labor costs, profit margins and prices of raw materials, which will gradually become available, of the political and economic trends that will be defined at international market, of projections and scenario analyzes to always be considered with prudence but essential for decisions. Decisions that will have to be taken in the coming months with the utmost attention, but without formulating a priori more or less realistic paths along which to proceed».
“The redistribution of energy costs should not be to the detriment of the reduction of the public debt”. Visco indicates a line of action to the Government: «At the domestic level, the increase in energy costs can be redistributed among income recipients, with targeted and temporary interventions to support the most affected families and businesses, but possibly not between generations through continuous slippages in the consolidation of the public debt». The Governor adds that «it is a ‘tax’ on our economy that cannot be returned to the sender and that cannot be eliminated through vain chases between prices and wages. In addition to continuing to aim at reducing its excesses through measured responses at European level, it must be contained over time with the diversification of supply sources and investments in renewable energies. In any case, the responsibility of the social partners remains crucial”.
The Governor of the Bank of Italy adds: “It is certainly not appropriate to count on the inflation tax to contain the weight of the public debt on the economy: one can only proceed with continuity with reforms and investments so that the growth potential take advantage of the resources available today for the National Recovery and Resilience Plan, at the same time showing prudence and responsibility on the public finance front”.