European Central Bank's Executive Board member Fabio Panetta said on Wednesday that the ECB's monetary policy must remain fully adaptable to changing developments, and the tightening must be calibrated prudently to avoid undesirable financial volatility.
Also, he added that the ECB should rely on its policy rate as the key instrument.
According to Panetta, the ECB must take into account all the relevant information when taking decisions, including developments outside the euro area, and should address spillovers from global policy responses to shocks. "This means our monetary policy should be data-dependent and adaptable," he added.
The official also said that the ECB should remain focused on its primary mandate of ensuring price stability in the Eurozone.
In addition, Panetta noted that medium-term inflation expectations in the euro area remain anchored at the ECB's target, but warned that risk is rather that wage and price-setting dynamics could make high inflation stickier and eventually feed into inflation expectations.