Further interest rate cuts are necessary to prevent inflation from falling below target levels, according to Fabio Panetta, a member of the European Central Bank's Governing Council and governor of the Bank of Italy.

Panetta emphasized the importance of additional reductions in borrowing costs, as current monetary conditions remain tight. He expressed concerns about the sluggishness of the real economy and warned that without a sustained recovery, inflation could significantly decrease, posing challenges for monetary policy.

Panetta's remarks highlight the ECB's commitment to addressing inflation risks while navigating economic recovery.