(Finance) – “The Russian invasion of Ukraine it changed the macroeconomic scenario almost overnight. In the current situation, financial stability is also exposed to significant risks for potential disruptions to energy supply and the consequences for the real economy and intermediaries, as well as dislocations in the financial markets “, said the governor of the Bank of ‘ Italy Ignazio Visco at the third Conference Financial Stability and Regulationorganized with Bocconi University.
“In this deep uncertainty Multi-channel amplification mechanisms may arise due to the tight interconnections within the global financial system, “he adds.
“Financial stability also runs significant risks, due to potential disruptions in energy supply and their consequences on the real economy and intermediaries, and dislocations in financial markets,” he said, focusing on the effects of the war in Ukraine at the third joint conference between the institute and the Bocconi University. “Amidst such profound uncertainties, the amplification mechanisms could come from various channels, due to the strong interconnectedness of the global financial system “.
“While we are still facing the complexities of the gradual exit from the policies adopted during the pandemic – explained Visco – new risks have dramatically taken center stage. The Russian invasion of Ukraine has changed the macroeconomic scenario almost overnight” .
Visco then stated that if the macroprudential policies they are and remain remain “the first line of defense against financial stability risks, we aim to base our monetary policy decisions on a more systematic assessment of the production and inflation risks created by the accumulation of financial vulnerabilities, of the extent to which macroprudential policies can mitigate these risks, and the characteristics of monetary policy instruments that minimize collateral effects on the financial sector “.
“I firmly believe that monetary policy in the euro area has not been around the curve,” the Governor emphasized in his speech at the annual conference. “The Ecb and Its watchers”underway in Frankfurt, adding that “the re-anchoring of inflation expectations also testifies to the success of the new monetary policy strategy completed in July of last year”.
For Visco then “there are certainly good reasons to believe that, given the wage outlook and the state of expectations, headline inflation will progressively converge to 2 percent as the serious disturbances generated by the dramatic evolution of the Russia-Ukraine war fade away “.