ECB should ease monetary policy if disinflationary trends intensify, Panetta says

MILAN, July 11 (Reuters) - The European Central Bank should continue to loosen its monetary policy if threats to economic growth from international trade tensions and geopolitical instability strengthen the current disinflationary trends, a policymaker said on Friday.

ECB governing council member Fabio Panetta told an annual meeting of Italy's banking association that the current outlook, which projects euro zone inflation at 1.4% in early 2026 with a return to 2% the following year, was highly uncertain.

"The key issue now is whether the current level of interest rates is adequate to keep inflation close to target, avoiding persistent deviations in either direction," he said.

"If downward risks to growth were to strengthen disinflationary trends, it will be appropriate to continue with the policy easing," he added.