Control of retail interest rates by the Central Bank is not provided for in legislation, and I believe it should remain so. This will not come as a surprise to students of economics, accustomed to understanding the problems that can be caused by preventing the emergence of a market-clearing price. But I think that there is an important political economy dimension here.
We can see before our eyes a series of cases where quick implementation of targeted reforms could have a strong impact, even in the near-term. For instance, despite the recession in Italy, unit labour costs have adjusted by only 0.1% relative to the euro area average since 2008.