ECB, debt, rates, mortgages, Mes, minimum wage and Pnrr. Now close to the expiry of his mandate, ready to give way to Fabio Panetta, the governor of Bank of Italy Ignazio Visco – during an interview with Sky TG24 – he issued a warning to banks and to those who have taken out a mortgage a variable rate, those who are paying the heaviest bill for the effects of the ECB's monetary tightening. "Mortgage rates can be fixed and variable, whoever chose the variable must also have the perception that, being variable, if there had been an increase that would have been a higher cost", explained Visco. “Not everyone is able to predict. We need more information and willingness to understand the risk”.
Spotlight on dividends turned back on
In this regard, the governor of Via Nazionale recalled that variable-rate mortgages "are only a third" of the total and those taken out from the beginning of 2023 also have "a cap, a limit within which it cannot go up". “There are measures underway that will help those most in need,” Visco added. The increase in interest rates and variable installments therefore does not involve a "systemic and financial stability” because “household debt in Italy is the lowest in Europe and the banking system is solid and has remained solid as a whole”. However, the "risks associated with a deterioration in credit quality" must not be overlooked: le banks they have to “set aside to meet the risks and not to exceed in the distribution of dividends”.
Not far from a pause on rate hikes
As for the ECB, the number one of Via Nazionale foresees that the path of rate hike it should stop shortly, giving families and businesses some breathing space. "It is right to maintain a restrictive stance" to bring inflation under control but "we must be attentive and cautious" as the effects of the increase in the cost of money "are seen over time, one and a half to two years", he warned. We will maintain this restriction for a while until there is effectively a return to price stability”. And that time may not be far off. “before the end of the year”, Visco anticipated, recalling how the decision on rates is taken on a case-by-case basis at each meeting.
The changes to the Mes are modest
Visco intervenes in the debate on the reform of the treaty that regulates the so-called State-saving fund and which awaits only the ratification of Italy to enter into force. "All in all, the revision of the ESM is modest and does not make it worse and there is an important element: to use the very high available funds for banking crises and I believe that we need to work to better design the use of the banking backstop ”. However, the now outgoing governor of Via Nazionale recalled the perplexities he expressed at the time regarding the "communication strategy" of the instrument. "I said that the use should not be perceived as a tool to restructure the country's debt because otherwise it increases the spread," he specified. “I was therefore not against revision but against interpretation”.
Minimum wage and Pnrr
Visco then addressed the issue of minimum salary, siding in favor of the bill. "It is said that in Italy there is already a contractual salary, in the various national labor contracts, but there are many who are not covered by these contracts and they are those of those people who I believe must be defended by a reasonable salary". he said, specifying that he did not want to go into the levels to be fixed. The assessment must be made "by those who are appointed to do so".
As regards the National recovery and resilience plan (Pnrr) – given that for days there has been discussion about changes to the objectives of the fourth installment – the governor underlined how “there may be discussions with the EU Commission, which however has a useful verification role”. An issue which, according to Visco, should not be underestimated "since it generates a positive effect on the GDP of our country".
