Visco: “To fight inflation and we need to raise rates but adelante con juicio”

«The path of the ECB is clear. To fight inflation, it is necessary to raise rates but “adelante con juicio”» affirms the governor of the Bank of Italy Ignazio Visco at the presentation of his new book “Inflation and monetary policy”, published by Laterza. Visco underlined how the goal of fighting inflation is shared in the Frankfurt council but there is a difference on “methods and times”.

He then goes back to asking the European social partners to “continue to show responsibility” on requests for wage increases in the face of inflation, in order to do their part together with monetary and budgetary policy and suggests “temporary interventions on labor costs and the partial absorption, where possible, in profit margins’. In his introduction to the new book he points out that “attempts to raise profit margins or wage demands that are completely unrelated to productivity gains aiming at a full recovery from inflation or even incorporate expectations of excessively high future price growth would only to prolong the phase of high inflation, amplifying its negative effects”. «As happened in the 1970s for the “sheikh’s tax” – the governor points out – the current energy shock constitutes an unavoidable burden for the country: it cannot be returned to the sender and the goal must be to absorb it as soon as possible haste as possible, also by redistributing the effects with interventions in favor of the families and businesses most affected, reducing the permanent burden on the state accounts to a minimum”.