Panetta says further rate increases may be necessary
Further policy rate increases may be necessary to contain energy-driven inflation, Banca d'Italia Governor Fabio Panetta said in Rome at World Savings Day. He also urged Europe to channel more savings into innovation.
Energy tests price stability
Euro area inflation has doubled since February to 3.8 percent, almost entirely because of energy, Panetta said.
The Persian Gulf conflict and closure of the Strait of Hormuz have raised fuel and gas prices.
Core inflation, wage growth and longer-term expectations remain contained, but inflation risks point upwards.
The European Central Bank (ECB) raised policy rates by 50 basis points between June and September and held them unchanged on October 29. Panetta said further increases may be necessary, while higher global long-term yields also tighten financing conditions.
Decisions will remain data-dependent and meeting-by-meeting.
ECB projections put GDP growth at around 1.2 percent in both 2026 and 2027.
Savings leave innovation underfunded
Euro area savings exceeded domestic investment by about €300 billion annually over the past decade, equivalent to 15 percent of productive investment.
Gross capital flows to the United States averaged €785 billion annually in 2024-25. Panetta called for integrated capital markets, stronger venture capital, common deposit insurance and a safe European asset.
He also stressed that finance needs profitable projects, supported by an integrated Single Market, harmonized rules, competitively priced energy and joint research and infrastructure investment.
Pensions depend on earnings
Panetta linked retirement security to stable work and rising incomes, not financial products alone.
Italy's supplementary pensions cover over 10 million people, or 40 percent of the labour force, with assets above 11.5 percent of GDP.
He advocated lower costs and consolidation, with members' interests guiding investment.
Source: Savings in a changing society
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