ECB will reconsider policy at March meeting, Bank of Italy chief says

The European Central Bank will reconsider its policy settings when it next met to decide on policy, amid risks of second-round effects from the impact of the drop in the price of crude oil on inflation and hence wages and that inflation expectations might become unhinged, the Bank of Italy´s chief said on Saturday.

"Inflation is struggling to return to a path consistent with price stability. There are risks of second-round effects from consumer price developments to wages, and of a disanchoring of expectations," Ignazio Visco said.

"[The ECB´s governing council] reconfirmed that there are no limits on how far it is willing to deploy the instruments available within its mandate," Visco added.

In his speech the central banker emphasised how the international economic outlook had become "more uncertain" with the recovery in advanced economies now appearing "less robust than was hoped".

To take note of, in his opinion the decline in oil prices was partrly the result of weakening demand.

Italy´s economy was recovering at a pace comparable with that of the euro area and lending to the real economy was slowly reviving, albeit from a recession of "exceptional duration and intensity, eclipsing the depression of the 1930s," Visco said.

The ECB´s governing council was next due to meet to decide on policy on 10 March.