Published by Global Banking & Finance Review®
Posted on June 18, 2025
1 min readLast updated: January 23, 2026
Add as preferred source on GoogleThe ECB will keep a flexible approach to monetary policy amid rising geopolitical tensions, particularly between Israel and Iran, with euro zone inflation below target.
MILAN (Reuters) -The European Central Bank will keep a flexible approach to monetary policy decisions against a backdrop where the conflict between Israel and Iran compounds risks from Washington's trade policy, a top policymaker said on Wednesday.
ECB Governing Council member Fabio Panetta, who heads Italy's central bank, said euro zone inflation was likely to remain below the 2% target for an extended period, against a "persistently weak" economy.
Panetta, in a speech at a Milan banking conference, pointed to "substantial and difficult-to-quantify risks" for the economic outlook stemming from the U.S. trade policy and the situation in the Middle East.
"Against this backdrop, the ECB's Governing Council, at its most recent meeting, reaffirmed a flexible approach, keeping its options open," he said.
"It will continue to take decisions on a meeting-by-meeting basis, without pre-committing to a defined course for monetary policy," he added.
(Reporting by Valentina Za, editing by Gianluca Semeraro and Jane Merriman)
The ECB is maintaining a flexible approach to its monetary policy decisions, keeping options open in light of current geopolitical tensions.
Fabio Panetta indicated that euro zone inflation is likely to remain below the 2% target for an extended period due to a persistently weak economy.
Panetta pointed to substantial and difficult-to-quantify risks stemming from U.S. trade policy and the ongoing conflict in the Middle East.
The ECB will continue to make decisions on a meeting-by-meeting basis without pre-committing to a defined course for monetary policy.
Panetta delivered his speech at a banking conference in Milan.
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