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

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.