“I take the blame, since I am the president of the institution”. Thus Christine Lagarde, president of the ECB, answers a question that recalls the great mistake of the European central bank: that of failing to understand the real extent of the threat of inflation.
“Yes, we were wrong in our predictions, but those mistakes were made by everyone. We did not do much differently from others ”, added Lagarde in the press conference following the announcement of the rate hike of 75 basis points by the ECB, launched precisely to defeat the inflation scourge.
The president of Eurotower specified that the staff of ECB economists work “constantly” in order to improve the economic models adopted in formulating forecasts.
But Lagarde was also on the defensive:
“How is a model that predicts Coronavirus possible? The war in Ukraine? The blackmail of energy (by Vladimir Putin’s Russia) ?. I take the blame; but it wasn’t just us who made mistakes ”.
At the same time, during the press conference Lagarde herself pointed out the difference between US inflation – which originates in demand – and euro area inflation, instead triggered by supply. And she admitted: “I cannot reduce the price of energy. I cannot convince the big players of this world to reduce gas prices. I cannot reform the electricity market. I am therefore very happy to see that the European Commission is considering various solutions to this end, because monetary policy will not reduce the price of energy ”.