The European Central Bank (ECB) must be careful not to over-react to high inflation in the short term, said ECB chief economist Philip Lane, warning that price pressures could go to extremes and weaken as much as possible. the Bloomberg agency.
“It’s extremely important that the central bank moves symmetrically towards its inflation target of 2%,” Lane told a digital conference hosted by MNI on Thursday. ECB officials must ensure that “they do not overreact to such an extent that the risk of short-term high inflation leading to excessive monetary policy, which will lead to inflation below the 2% target, comes to the fore. in the medium term “.
The debate over exactly how to exit the pandemic-era stimulus measures has intensified since ECB President Christine Lagarde explained earlier in February that a 2022 rate hike could no longer be ruled out.
Lane noted that a stabilization of inflation close to 2% in the medium term would allow a “gradual normalization” of monetary policy.
Source: Capital
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