Frankfurt, Dec. 31 /BNA/: European Central Bank President Christine Lagarde told a Croatian newspaper that wages in the eurozone are growing faster than previously thought and the ECB must prevent this from adding to already high inflation.
The European Central Bank has raised interest rates by a total of 2.5 percentage points since July in a bid to stem a historic spike in inflation and has promised further policy tightening at its next several meetings as long-term price growth expectations begin to move above 2%. targeting.
“We know that wages are increasing, perhaps faster than expected,” Lagarde was quoted as saying by Croatian newspaper Jutarnije on Saturday. “We must not allow inflationary expectations to become unstable or for wages to have an inflationary effect.”
Lagarde offered no new policy hints in the interview, but said the bank should “take the necessary measures” to bring inflation down to 2% from its current rate of close to 10%, Reuters reported.
Croatia will join the eurozone on January 1 as the currency bloc’s 20th member, entering the elite club at a time of extraordinary turmoil as the European Central Bank tries to rein in inflation after spending the past decade unleashing unprecedented stimulus. To revive price growth when it was exceptional. Few.
“We need to be careful that the domestic causes that we are seeing, mainly related to fiscal measures and wage dynamics, do not entrench inflation,” Lagarde said.
Lagarde added that the expected winter bloc recession, caused by higher energy costs, is likely to be short and shallow, provided there are no additional shocks.
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