Enlarge image
ECB President Christine Lagarde: Be careful, but not panic
Photo: DANIEL ROLAND / AFP
Christine Lagarde, President of the European Central Bank (ECB), warns against scare tactics in view of the current high inflation rates. "Some influencing factors are likely to disappear again soon, such as the price-driving effects that result from disrupted supply chains or from the withdrawal of the VAT reduction in Germany," Lagarde told SPIEGEL. Monetary policy has no direct influence on these phenomena anyway. She assumes that the effects are largely temporary and that inflation will fall again in 2022.
"For this reason we shouldn't overreact now," she said.
"A hasty tightening of monetary policy at this point in time could also jeopardize the recovery of the euro area economy and cost jobs."
In the eurozone, statisticians recently registered a price surge of 3.4 percent, the highest since 2008. The trend continues to rise.
In Germany, prices in September were 4.1 percent higher than a year earlier - the highest increase since 1993. Experts expect the price increase towards the end of the year to reach as much as five percent in a twelve-month comparison.
On average for the year, inflation is likely to be more than three percent, well above the European Central Bank (ECB) target of two percent.
Lagarde compared the current situation with the situation in Japan after the 2011 tsunami. At that time, automakers were almost completely cut off from supplies, but after nine months the situation was normal again and the supply chains were intact again.
"Managers will do everything they can to get their businesses back on track today," said Lagarde.
The ECB is closely monitoring possible second-round effects, especially due to high wage demands.
The central bank will ensure "that inflation expectations are anchored at two percent."
baz