The pace of economic growth in the eurozone could lead to negative ground in 2022 and the actions of the European Central Bank to reduce inflation, risk crushing the economy, said the board member. of the ECB, Fabio Panetta.
With inflation in the eurozone hitting a record 7.5%, the ECB is coming under increasing pressure for a tougher policy, despite much of the rise in prices being attributed to energy prices, which are beyond its control. Bank.
“Quarterly growth rates will be very low this year,” Panetta said in a statement.
Panetta argued that oil and gas prices would remain high for longer periods of time and food prices could also rise further, so it would be costly for the ECB to reduce current inflation, while medium-term expectations remain around its goal.
“Instead, we should massively squeeze domestic demand to reduce inflation,” he added.
On the contrary, he stressed, governments should be the ones to help alleviate the crisis by providing subsidies or reducing taxes, while he argued that the ECB should only act if high prices lead to higher inflation expectations. .
Source: Capital
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