The chief economist at the European Central Bank, Philip Lane, said the period of “unexpectedly high” consumer price increases did not bode well for a problem similar to that experienced by economies worldwide in the 1970s.
“If we look at the situation in the medium term, inflation is still very low, below our 2% target,” he told Spain’s El Pais.
“This period of inflation is very unusual and temporary, and not an indication of a chronic situation. The situation we are in now is very different from that in the 1970s and 1980s,” he added.
These statements promote a view that has been challenged in recent weeks by investors who appeared to be skeptical of the ECB’s analysis of inflation, and of its commitment to keeping interest rates particularly low next year.
The BoD The ECB also shows signs of splitting in terms of where prices will move. “Lagarde has stressed how officials are monitoring prices for signs of a shift in risk, although Lane has insisted that there is no sign of a threat so far.”
“We will have in mind unsustainable patterns that could lead to pressures that are undesirable from the point of view of inflation. But let me emphasize: we do not see this now. It is more the risk factor that we need to be aware of.” reported.
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Source From: Capital
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