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ECB can continue to gradually lower rates, Panetta says - REUTERS
ROME, July 9 (Reuters) - The European Central Bank can continue to gradually reduce interest rates without jeopardising a current fall in inflation, governing council member Fabio Panetta said on Tuesday.
The ECB cut rates for the first time in June from their record highs, but has made no explicit commitment on a follow-up move.
"The reduction of official rates can proceed gradually, accompanying the return of inflation towards the objective, if macroeconomic trends remain in line with the ECB's expectations," Panetta, who is governor of the Bank of Italy, told bankers at a conference in Rome.
Panetta is widely considered a monetary policy dove.
He played down concerns over persistently high service sector prices, saying it was normal their decline should lag that of goods prices, and said wage growth can also be expected to moderate.
"Past interest rate hikes are still dampening demand, output and inflation and will continue to do so in the months to come," Panetta said.
At the same conference, Italy's Economy Minister Giancarlo Giorgetti reiterated his call for an acceleration of interest rate cuts.
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"A further contraction in demand could prove unsustainable and in any case difficult to bear for economies like Italy's that need to breathe," Giorgetti said.
