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Christine Lagarde says EU inflation a passing ‘hump’ and 2022 rate rise ‘very unlikely’
Corso: Macroeconomia (52462)
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ECB president Christine Lagarde: ‘I see an inflation profile that looks like a hump . . . and a hump eventually declines’ © REUTERS
Martin Arnold in Frankfurt DECEMBER 3 2021
The president of the European Central Bank said it was unlikely eurozone interest rates would
increase next year, calling the current rise in inflation a passing “hump”, but added that the ECB
would act swiftly if needed to staunch the increase in prices.
Despite eurozone inflation hitting a record high of 4.9 per cent in November, well above the ECB’s
target of 2 per cent, Christine Lagarde said it was likely to have peaked and would decline next
year.
“I see an inflation profile that looks like a hump . . . and a hump eventually declines,” she said at a
Reuters virtual event. Lagarde also repeated her assertion that the ECB was “very unlikely” to raise
interest rates next year.
Her comments contrast with a recent policy shift at the US Federal Reserve, whose chair Jay
Powell this week said it would speed up the withdrawal of its bond purchases to fight soaring
inflation, fuelling expectations that it was likely to raise rates next year.
Lagarde said it was too early to say what impact the Omicron coronavirus variant would have on
Europe’s recent economic recovery and on inflation. “We have to wait for the scientists to tell us
[more about the variant],” she said.
“But equally, we need to very clearly indicate that we stand ready [to act] in both directions,” she
added. Once inflation is on track to stay above 2 per cent for the next few years, fulfilling the
conditions set by the ECB for rates to rise, she said the bank “would not hesitate to act”.
Some economists have said the new variant could mean inflation stays higher for longer as fresh
restrictions disrupt trade and shift demand from services to goods, worsening supply chain
bottlenecks that have pushed up prices around the world.
However, Lagarde said 55 to 60 per cent of recent inflation came from soaring energy prices and
there was “reason to believe that by the end of 2022 it will have declined significantly”.
European Central Bank
Christine Lagarde says EU inflation a passing ‘hump’ and 2022 rate rise ‘very unlikely’
ECB chief stresses central bank ‘would not hesitate to act’ if needed