Too much ECB tightening could damage growth, Panetta says

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Reuters UK

FRANKFURT (Reuters) – The European Central Bank must keep raising rates but needs to avoid overtightening as that could destroy productive capacity and deepen a recession, ECB board member Fabio Panetta said on Monday. “If we were to compress demand in an excessive and persistent manner, we would face the risk of also pushing output permanently below trend,” Panetta said in a speech. “This reinforces the case that, for as long as inflation expectations remain anchored, monetary policy should adjust but not overreact,” he said. (Reporting by Balazs Koranyi; Editing by Francesco Canepa)

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