Rising inflation is worrying many consumers.
Bankers warn against underestimating price developments.
The European Central Bank is persistent, however.
Frankfurt / Main - Europe's monetary watchdogs are not being urged by the sharp rise in inflation rates to exit the policy of cheap money more quickly.
On the contrary: ECB President Christine Lagarde confirmed on Friday that the European Central Bank (ECB) would continue to support the economy even after the acute pandemic had ended. This also includes an "appropriate calibration" of the central bank's bond purchases. "We will announce our intentions in this regard in December," said Lagarde. The Governing Council will hold its next regular monetary policy meeting on December 16.
"We do not take this phase of higher inflation lightly," assured Lagarde at a Frankfurt banking congress that was broadcast on the Internet.
The central bank should, however, “not go over to an early tightening of monetary policy in view of temporary or supply-related inflation shocks”, affirmed the ECB President.
"At a time when purchasing power is already being diminished by higher energy and fuel costs, an inadequate tightening would mean an unjustified headwind for the upswing."
Prices keep rising
The inflation rates have been climbing for months.
In Germany, for example, consumer prices in October were 4.5 percent above the level of the same month last year.
Inflation in Europe's largest economy is as high as it was 28 years ago.
In the euro area, too, the inflation rate of 4.1 percent in October was well above the medium-term target of 2 percent that the ECB is aiming for.
“This inflation is undesirable and painful - and of course there are concerns about how long it will last.
We take these concerns very seriously and are carefully monitoring developments, ”said Lagarde.
"In particular, we are aware that higher inflation is depressing people's real incomes, especially those at the lower end of the income distribution."
Lagarde reiterated the central bank's view that a large part of the surge in inflation can be explained by special factors that should gradually weaken again over the next year.
The monetary authorities name, for example, the recovery in oil prices after the corona shock and delivery bottlenecks as a result of increased demand.
In addition, the withdrawal of the temporary VAT cut is having an impact in Germany.
There is "structural inflation"
"I believe that we are underestimating that this inflation will actually last longer and that the inflation rates will remain higher than some people and economists have thought in the past six or seven months," Deutsche Bank boss Christian Sewing replied to Lagarde's lecture .
There is “structural inflation”, driven for example by rising costs in connection with climate change.
He assumes that the inflation trends of the past four to six weeks will continue into the first half of 2022, said Sewing and demanded: "A response from the central bank should come sooner than we have just heard."
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Critics accuse the ECB of using the cheap money to fuel inflation, which it actually wants to keep in check.
The chairman of the board of directors of the major French bank BNP Paribas, Jean Lemierre, contradicted: “A slightly higher underlying inflation is not bad.
It will help achieve the goals of the ECB.
We have waited a long time for this. ”Lemierre emphasized,“ The real question today is not inflation.
I am sorry to say that.
The real question is growth.
Will we be able to switch from recovery to growth? ”He was in a positive mood.
Decision in December
On December 16, the Governing Council of the ECB wants to decide how to proceed with the multi-billion dollar bond purchases by the central bank.
According to previous planning, the PEPP (Pandemic Emergency Purchase Program) purchase program, which was launched to cushion the corona shock and has a volume of 1.85 trillion euros, will expire in March 2022.
There is sympathy in the Governing Council for the idea of transferring the flexibility of this emergency purchase program to other bond purchase programs.
It will be "even after the expected end of the pandemic emergency that monetary policy - including an appropriate calibration of asset purchases - supports the recovery and the sustainable return of inflation to our target of 2 percent," said Lagarde.
“We are determined to ensure that inflation stabilizes at our target of 2 percent in the medium term,” she said.
"Today inflation is largely driven up by the extraordinary circumstances caused by the pandemic." Therefore, monetary policy must "remain patient and persistent," said the ECB President.
dpa