Le economic prospects of the euro area “are being done more and more gloomy”, while the fallout from the war in Ukraine continues to be felt. She said it today Christine Lagarde, president of the ECB, during a hearing before the European Parliament. “Inflation is by far too high and we expect it to stay above our target for an extended period of time,” he added.
ECB, Lagarde: "several rate hikes" still on the way
For these reasons, at the ECB “we expect to further raise interest rates in several of the forthcoming meetings of the Governing Council – Lagarde continued – in order to curb demand and avert the risk of a persistent increase in inflation expectations. We will regularly evaluate our policy stance based on incoming information and developments in the inflation outlook. Our future rate decisions will continue to be based on data and a time-to-time approach."
Lagarde to governments: "Don't feed inflation"
In this phase of high inflation, continued the number one of the ECB, "it is essential" that family support measures against the impact of expensive energy are “temporary and targeted”, in order to "limit the risks of fueling pressure" on inflation and facilitate the task of monetary policy, which has as its primary objective precisely ensuring price stability.
According to Lagarde, "generalized measures, raining down, certainly don't help monetary policy", but rather hinder it. “Fiscal policy must be designed to help those who need it most in a targeted way. Unfortunately, when one looks at some of the measures taken” in the EU, “they are more generalized than targeted”.
The anti-spread shield "is not for just one country"…
Finally, Lagarde referred to the new ECB anti-spread shield (TPI), underlining that "it is not conceived for a specific country (namely Italy, ed), but was created for the entire Eurozone" and that its objective "is to ensure an appropriate transmission of monetary policy in all the countries of the euro area, from the Baltics to Malta”.
