ECB’s Panetta warns tighter policy could inflict unnecessary damage

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The European Central Bank should implement the ongoing policy normalisation in a prudent manner to avoid unnecessary economic damage, said executive board member Fabio Panetta today (November 14).

“Conducting monetary policy based on the view that potential [output] is permanently lower – without clear evidence that this is the case – could prove self-fulfilling and costly,” said Panetta in a speech. “The evidence increasingly shows that destroying demand also affects supply.”

Many economists

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