Friday, December 3

Insider: ECB representatives see the risk of inflation above target

According to insiders, the inflation outlook in the euro zone caused a lot of discussion at the interest rate meeting of the European Central Bank (ECB). According to two people familiar with the situation, the euro watchdogs advised on the risk that the inflation rate could remain above the ECB target of two percent next year.

They also disagreed on whether inflation would then decline again in 2023. An ECB spokesman declined to comment on the information.

ECB President Christine Lagarde said at the press conference after the interest rate meeting that the current surge in inflation will probably last longer than previously thought. At the same time, however, it reaffirmed the previous view of the euro watchdogs that the price pressure will ease again in 2022 and that inflation will then fall again.

September: 3.4 percent in the euro area

Inflation in the euro area was 3.4 percent in September, the highest it has been in 13 years. Experts expect a further increase to 3.7 percent for October. So far, the ECB has assumed in its forecasts that the rate of inflation will fall below the ECB target by 1.7 percent in 2022. New forecasts from ECB economists are expected at the December interest rate meeting.

According to insiders, chief economist Philip Lane and other council members, who are more in favor of loose monetary policy, argued that inflation was likely to stay below the ECB’s target in 2023.

Proponents of a tighter monetary policy, on the other hand, would have suggested that market-based inflation expectations indicated higher rates. However, none of the monetary watchdogs supported speculation on the stock exchange, which assume an interest rate hike in the coming year.

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