ECB: Lagarde says inflation will remain high in the coming quarters, putting the medium-term target at risk
The president in an interview with The Yomiuri Shimbun
(Il Sole 24 Ore Radiocor) - “We know that inflation figures will remain high over the coming quarters. The higher the levels reached and the longer they remain at those levels, the greater the risks to our medium-term inflation target.” So said ECB President Christine Lagarde in an interview with the Japanese newspaper The Yomiuri Shimbun, speaking about the inflation outlook. Lagarde pointed out that in October, headline inflation “stood at 4 per cent, a level higher than our expectations a few months ago, but in line with market expectations”. This figure “appears very high”, which is why “it is important to look at what lies beneath the surface”: the rise is largely attributable to energy. As for second-round effects, there are currently no signs beyond those already factored into the projections, said Lagarde, who assured that the ECB is “closely monitoring forward-looking indicators, such as multi-year wage agreements and businesses’ expectations regarding wage trends”, but for now she sees no ‘signs of a change’. The President then reiterated that it is not appropriate to pre-empt interest rate forecasts, even though ‘it is clear that, compared with the September projections, there have been some significant changes. Energy futures curves have risen, and this will have repercussions on both inflation and growth, even though oil prices have fallen more recently. Long-term interest rates have also risen’. In any case, “it will be our forecasting exercise that determines how these various factors will influence inflation in the medium term,” Lagarde added.
mar-red
