ECB: Cipollone says price stability enables businesses to plan and thrive

(Il Sole 24 Ore Radiocor) - “The ECB has a statutory mandate to ensure price stability, which forms part of macroeconomic stability and is an essential factor in enabling businesses to thrive, as it reduces uncertainty and the costs associated with it.” Indeed, “price stability also leads to greater stability in nominal interest rates, which enables businesses to plan their future more effectively”. This was stated by Piero Cipollone, a member of the ECB’s Executive Board, in an interview with Il Sussidiario.net on the sidelines of the Rimini Meeting. Monetary policy measures, Cipollone reiterates, must always be “carefully calibrated”. Indeed, in the event of a shock such as the energy crisis linked to the war in Iran, “raising interest rates to bring inflation back towards the target may slow down economic growth, which is already suffering from a negative shock”. However, even though central banks “cannot do much about the rise in energy commodity prices”, explains the member of the ECB’s Executive Board, “they can ensure that these increases do not feed through to medium-term inflation expectations. In other words, they can anchor expectations so that economic agents know that, beyond temporary fluctuations, inflation will return to 2 per cent – he explains that the macroeconomic outlook will stabilise, and they can therefore plan their activities”.

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