ECB/Panetta: It's essential to be pragmatic and data-driven when setting interest rates.
Fabio Panetta, a member of the ECB Governing Council, stated in a letter to the Financial Times that the European Central Bank should adopt a pragmatic and data-driven approach when setting interest rates. As the President of the Bank of Italy, Panetta emphasized that during the current period of acute uncertainty, the ECB should focus primarily on inflation projections rather than attempting to calculate a so-called neutral interest rate.
He noted, "Overall, macroeconomic indicators and projections indicate that there is still work to be done. However, determining exactly how much and when, in light of numerous 'known unknowns' that cloud the outlook, remains extraordinarily complex. The ECB must continue to be pragmatic and data-driven."