European Central Bank (ECB) executive board member Fabio Panetta said on Friday that the ECB’s policy normalization should remain gradual, as reported by Reuters.
“Surge in prices does not reflect excess demand in the euro area.”
“Acting against fragmentation is necessary for us to fulfil that mandate.”
“Inflation expectations stand at around 2% and wage increases remain moderate.”
“Vulnerable countries, fragmentation would lead to capital outflows and an increase in yields, resulting in financing conditions that would be too tight.”
“Least vulnerable countries would experience capital inflows that would compress yields.”
“Action to prevent fragmentation is therefore not at odds with the normalisation.”
“Beyond ending negative rates, further adjustments to our monetary policy stance will depend on the evolution of the outlook.”
These comments failed to help the shared currency find demand and the EUR/USD pair was last seen losing 0.2% on a daily basis at 1.0460.