Overview
- Fabio Panetta defended the ECB’s 25 basis‑point June increase but said on Tuesday that repeating a large, automatic sequence of hikes like 2022 would be a mistake.
- He said the current shock differs from 2022 because demand is weaker today and real interest rates are higher, and the recent price rise is driven more by oil than by gas.
- Panetta called for policy that is strictly data dependent and based on alternative scenarios so the ECB does not commit to a predetermined path for rates.
- He warned that eurozone prospects remain fragile and that upside risks to inflation coexist with downside risks to growth, so officials must closely watch energy markets, wages, supply chains and inflation expectations.
- Panetta framed the moment as part of a broader 'Great Reconfiguration' driven by geopolitics, AI, digital finance, ageing and climate change and said these forces are changing how monetary policy affects households and firms, with potential to widen divisions inside the Governing Council over future moves.