The European Central Bank warned of “victims” to curb inflation
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European Central Bank (ECB) officials have warned that price increases could spiral out of control unless drastic measures are taken to curb inflation. The ECB declared the need to sacrifice economic growth in order to achieve this goal, transmits financial times.
ECB Governing Council member Isabelle Schnabel and Bank of France governor François Villeroy de Gallo said European monetary policy should remain tight for a long time to come.
Central banks, according to Schnabel, may face a high loss ratio, which shows how central banks of individual countries are ready to slow down economic growth and reduce the number of new jobs to reduce inflation. In her opinion, this figure will be higher than in the 1980s.
“The globalization of inflation makes it difficult for central banks to control price increases,” Schnabel said.
According to Villeroy, the regulator is ready to raise interest rates above the so-called neutral rate – a level that does not contribute to economic growth, but does not limit it either.
Eurozone inflation is expected to hit a new all-time high of 9% in August. The data, according to the FT, will be published on August 31.
Annual inflation in 19 Eurozone countries accelerated to 8.9% in July after 8.6% a month earlier, updating a historical record, Eurostat said earlier.
In order to bring inflation back to target levels, on July 21, the ECB decided to raise the key rate by 50 basis points at once – up to 0.5%, the increase with such a step occurred for the first time since 2011. Further normalization of interest rates is appropriate.”
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