The President of the European Central Bank (ECB), Christine Lagarde, warned this Friday that it is not advisable to “withdraw monetary stimulus prematurely in the euro area” because the current high inflation will subside.
At the 31st European Banking Congress in Frankfurt, Lagarde reiterated that “It is very unlikely that the conditions will exist to raise interest rates next year”.
Even, he added, after the emergency situation of the pandemic ends, “it will be important for monetary policy, including the adjustment of asset purchases, support the recovery and the sustained return of inflation ”to the 2% target.
The ECB will announce its intentions regarding purchases of public and private debt after its meeting in mid-December.
“If we are patient and constant now, I am sure that these conditions will be achieved,” added the President of the ECB.
Lagarde showed herself convinced that current inflationary pressures will subside over time and that they will achieve their 2% target medium term.
“This inflation is untimely and painful and there are naturally concerns about how long it will last. We take these concerns very seriously and watch evolution carefully, ”Lagarde said.
The President of the ECB acknowledged that “Higher inflation reduces people’s real incomes, especially those at the bottom of the income distribution”.
But tightening monetary policy prematurely would not only further reduce household incomes, it would also reduce would not address the causes of inflation because energy prices are set globally and the ECB’s monetary policy cannot remedy supply bottlenecks, according to Lagarde.
(With information from EFE)
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