Panetta: rapidly falling inflation, possible rate cut

Inflation is "falling rapidly" making "a rate cut possible". Thus the Governor of the Bank of Italy Fabio Panetta and member of the Governing Council of the ECB during a lecture in commemoration of the 150th anniversary of the birth of Luigi Einaudi. Panetta recalled what he had already said at the Forex on the inflation trend and its approach to the 2 per cent target. For a rate cut, he adds, 'goes the consensus that has been emerging especially in the most recent weeks within the ECB Governing Council'.

The reduction of 'high public debt' must be implemented with 'the Einaudian principle of striving, with the necessary flexibility, for a lasting rebalancing of public accounts'. Thus again the governor of the Bank of Italy. "This requires both short and medium-term expenditure planning and measures capable of ensuring a gradual but steady reduction in debt over time". A credible reduction path 'will increase the room for manoeuvre for fiscal interventions of a social nature and for dealing with future unforeseen situations'. Panetta recalls some of Einaudi's 'still relevant' teachings. "Favouring competition without excesses; prudent management of public finances, striving to stimulate growth and reduce debt; preserving monetary stability; shifting the concept of sovereignty away from the national level in favour of a stronger, more open and supportive Europe that counts in the world".

"The ultimate objective of the European Central Bank can only be the same" as that implemented in the post-war period by the Bank of Italy under Luigi Einaudi, "to regain price stability without unnecessary damage to the real economy". This was said by Bank of Italy Governor Fabio Panetta.

Bank of Italy Governor Fabio Panetta praises Luigi Einaudi's 'prescience' and his belief in 'a federation to which the member states confer binding powers in their own interest', 'where he contrasts the myth of absolute sovereignty with the need for cooperation imposed by growing interdependence'. Speaking at the conference to celebrate the 150th anniversary of the birth of the economist, central banker and politician, Panetta emphasised that 'he would probably have supported the Economic and Monetary Union project. The Ventotene Manifesto itself, which marked the road to European integration, was also inspired, according to its first draftsman Altiero Spinelli, by Einaudi's writings - in particular, by the letters published under the pseudonym Junius in the 'Corriere della sera' close to the end of the First World War where he wrote 'The truth is the bond, not the sovereignty of states. The truth is the interdependence of free peoples, not their absolute independence''.