ROME (Reuters) - The Bank of Italy on Friday urged the European Central Bank to be cautious in making euro zone monetary policy less expansionary, warning of the risks of a sudden end to asset buying or sharp rises in interest rates.
“It’s necessary that monetary policy remain expansionary for a long time,” Fabio Panetta, one of the Italian central banks’s four executive board members, said in a speech.
Normalizing monetary policy can be achieved without causing a negative shock for the euro zone economy or the financial system “as long as it is done in a context of robust growth and in a gradual way,” said Panetta.
Italy is the euro zone’s most sluggish economy and has its second highest public debt as a proportion of national output.
Reporting By Gavin Jones