Balotelli’s future has been the subject of intense speculation all summer, with reports suggesting that he could be set to return to the Premier League following an eventful two-and-a-half-year spell with Manchester City earlier in his career.
However, Milan CEO Adriano Galliani has denied receiving any bid from Arsenal and head coach Inzaghi is staying relaxed about the situation.
He wants the 23-year-old to regard this season as a fresh start and find his best form, although he accepts that it is up to the club to decide on what happens.
"I am calm, Mario is an important player and I will try to help him improve," Inzaghi said at a press conference.
"I will reset everything that has been said about him, I have no problem with him. I have to make the most of his ability.
"Will he leave? The club will decide. If he leaves then we will need a replacement because the centre-forwards are him and (Giampaolo) Pazzini. However, I believe that he will remain here."
Inzaghi joined Galliani and club president Silvio Berlusconi for a meeting on Sunday about the club’s transfer plans.
He said: "The club knows my priorities. We are missing something to get to the level of Juve, Roma and Napoli."