(Finance) – “In Europe gas prices increased by 8-10 times on average between the beginning of 2020 and February 2022, in the US they increased by 2 times”. This is what the Governor of the Bank of Italy, Ignazio Visco, in his speech to Bloomberg Italy Capital Markets Forum 2022 in Milan. This divergence – underlined Visco – shows that the EU is not facing “a problem of excess demand but of supply difficulties”.
In this scenario, faced with a supply shock like the one currently occurring on energy prices, – continued the governor of the Bank of Italy – “the monetary policy of central banks it can do little, but budgetary and economic policy can intervene, perhaps with measures to “redistribute what is like a tax”. And “if economic policy manages to reduce the transfer of price increases to other items” and “if the war does not last too long”, then – Visco explained – “we may not have stagnation and high inflation”, that is, “stagflation”. “The forecasts – he added – all say that the end of an offer shock is accompanied by reductions in pressure on prices”.
Visco announced the decision of the ECB “to start a gradual normalization of monetary policy with the addition of the word ‘optionality’. It means – he continued – that all options are open. We intend to reduce our net purchases of securities and then close them but we want to maintain favorable financing conditions. Looking ahead to a normal world, she explained, is the one where there are no more negative rates “.
At the ECB and in the Eurosystem of central banks the question of reduction in the size of the budget – said the governor – “it will not happen soon, given that at the moment we are discussing how to renew the accumulated titles. The question here – concluded Visco – is how we find more normal conditions, given that we do not know what the new normal will be”.
“I would like to thank the governor of the Bank of Italy, Ignazio Visco, for the clarity with which he expressed himself: at these energy prices, now rising again, – commented the president of Confindustria, Carlo Bonomi – businesses simply cannot hold up. So we reiterate the need for structural interventions “.