Growth rates in the euro zone could fall into negative territory this year, and a tightening of monetary policy by the European Central Bank to reduce inflation in the short term risks crashing the economy, said ECB council member Fabio Panetta. this Wednesday (6).
With eurozone inflation at a record high of 7.5%, the ECB is under increasing pressure to tighten monetary policy, even though most of the rapid rise in prices is a reflection of high energy costs, which are largely outside the bank’s control.
Instead, Panetta said European governments should help the most vulnerable families and jointly fund what is likely to be a costly move away from Russian energy.
“The quarterly growth rates will be very low this year,” Panetta said in a speech. “The adverse impact of war can push them into negative territory and produce more lasting effects.”
Panetta argued that oil and gas prices will remain high for longer, while food prices may also rise further, and so it would be too expensive for the ECB to reduce current inflation while medium-term expectations remain. around your goal.
Source: CNN Brasil
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