Executive Board member of the European Central Bank, Fabio Panetta, stated Thursday that the current path of monetary policy "is clear," however he also went into recognizing that the implementation of correct calibration of monetary policy "will be challenging."
"A further policy adjustment is warranted in order to keep inflation expectations anchored and stave off second-round effects," said Panetta in his latest speech. Moreover, he also stressed that the proper adaptation of the ECB's stance should closely follow the medium-term inflationary developments.
In that sense, he alerted that other solutions or directions can create undesirable effects, "achieving a little reduction of inflation in the short term" while creating severe "market volatility and a protracted economic slowdown beyond what is necessary to stabilize inflation in the medium term."
