Panetta said that if economic growth impacts inflation, the European Central Bank should increase the magnitude of interest rate cuts.

date
11/07/2025
Fabio Panetta, a member of the European Central Bank's Executive Board, stated that if economic growth falls below expectations and excessively dampens inflation, the ECB should further lower interest rates. The Italian central bank governor said in a speech on Friday, "If the downside risks to growth exacerbate the deflationary trend, then continuing to implement loose monetary policy would be appropriate." Panetta's remarks did not suggest any immediate action needed to be taken at the meeting on July 24 - it is widely expected that ECB officials will keep borrowing costs unchanged at this meeting. He pledged that officials will remain "flexible and pragmatic" in their policy decisions, making decisions on a case-by-case basis based on existing information and its impact on the inflation outlook.