PANETTA, ECB governing council member and Bank of Italy governor, said on Friday
the ECB may need to raise policy rates further to tackle high inf and to prevent
inflationary pressures spilling into wages. He warned that if price and wage
expectations become entrenched a costly wage‑price spiral could ensue, and with
inf expected to remain above target for longer and risks tilted to the upside
further rate increases could be necessary. He cautioned that the ECB should
gradually calibrate policy while accounting for the recent sharp rise in
sovereign yields, which has already lifted borrowing costs. On Italy, PANETTA
said the country’s credit rating has room to be upgraded but urged the
government to maintain prudent fiscal management.
