“Budgetary policies” and “salary dynamics” are promoting the entrenchment of inflationary pressures that began due to external causes. And that is why the president of the ECB says that it will be necessary to continue raising interest rates, to try to contain these “internally generated causes of inflation.” Otherwise, “it would be even worse” for everyone, says Christine Lagarde.
In an interview with a Croatian newspaper, on the eve of Croatia’s entry into the euro zone, Lagarde says that “interest rates are going up for everyone”, inside and outside the euro zone. Since the ECB is not the only central bank with an inflation problem, Lagarde stresses that monetary policy tightening will need to continue. “Right now, interest rates have to keep rising to control inflation and bring it back to our 2% target,” he tells the Jutarnji List newspaper.
“This process is essential because it would be even worse if we allowed inflation to [elevada] take root in the economy”, warns the president of the ECB.
We have a mandate to preserve price stability. And we are going to do it ”, says Lagarde.
The official argues that the ECB has to “show resilience in the face of persistent inflation and we have to be careful not only to analyze its symptoms but also its roots”, says the ECB president, leaving the question: “What is causing this inflation? Lagarde answers herself by saying that “in the beginning it was caused predominantly by the supply side”, that is, by problems associated with difficulties in global supply chains.
“But now we have to be careful with the causes of inflation that are generated internally, which are mainly caused by budgetary measures and salary dynamics,” criticizes Christine Lagarde, who has already called on several occasions for all public support to minimize The impacts of inflation are temporary and surgical, helping only the most vulnerable citizens.
Source: Observadora
