Reuters reports that ECB board member Fabio Panetta told Spanish newspaper El Pais that the European Central Bank should accept no further delay in lifting inflation back to its target as the current outlook is unsatisfactory and persistent misses risk damaging the economy.
“The argument that we could extend the horizon to meet the aim is not a convincing one,” El Pais quoted him on Sunday as saying. “The ECB has failed to reach its aim for too many years already.”
“Waiting will be even more costly,” Panetta argued. “It would make it more difficult to re-anchor inflation expectations and we would risk a permanent reduction of economic potential.”
Market implications
The euro is trading back below 1.19 vs the greenback and feels heavy after being unable to sustain the move higher with the market rethinking its central bank expectations.
The next ECB meeting is April 22, but no change is expected. Much will depend on how yields are trading between now and then.
Share
