According to NTD TV, on November 28 local time, European Central Bank President Lagarde said at a hearing on monetary policy held by the European Parliament in Brussels, “We have not seen any factors or signs that lead me to believe that we have reached inflation. peak and will decline in the short term.”
Euro zone inflation soared to a record 10.6% in October. German inflation data for November showed that price pressures in Germany, Europe’s largest economy, eased slightly, followed by some economists expecting a slight decline in inflation in November.
The European Central Bank’s chief economist Isabel Schnabel (Isabel Schnabel) and Philip Lane (Philip Lane) sparred over future inflation and interest rates, leaving investors confused about the next step of the ECB’s policy direction, and the market has been uncertain about the ECB. Whether there will be a rate hike of 50 or 75 basis points at the meeting on December 15th, it is also uncertain whether this is the apex.
However, Lagarde, President of the European Central Bank, made a diametrically opposite prediction on Monday (28th). She believes that the current inflation rate in Europe still has obvious upside risks. Not only has it not peaked, it may even be higher than currently expected. be tall. Suggesting that the European Central Bank may not take dovish measures in raising interest rates in the future.
The ECB had previously raised bank deposit rates by a record 200 basis points to 1.5 percent in three months to curb demand and lower prices, the report said.
Responding to the debate between the two economists, Lagarde said both issues depended on a range of variables including wages and inflation expectations. She added, however, that the ECB will decide on monetary policy actions on a case-by-case basis based on economic data. “How far we need to go, and how quickly we need to act, will depend on our latest outlook, the persistence of the shock, the response of wage and inflation expectations, and our assessment of the transmission of the policy stance,” Lagarde said.
Lagarde pointed out that high uncertainty, tightening financial conditions and weak global demand are weighing on economic growth, and the euro zone economy is expected to continue to weaken for the rest of this year and early next year. Plus, the labor market is strong, which could support higher wages. But high inflation in the euro zone is undercutting consumer spending and factory production.
Regarding the reduction of the European Central Bank’s balance sheet, Lagarde believes that it must be reduced prudently and predictably.
Lagarde expects the euro zone economy to continue to weaken for the rest of this year and early next year. She promised that the European Central Bank is committed to reducing the inflation rate to the medium-term target of 2%, and is determined to take the necessary measures to this end. Suggesting a series of rate hikes ahead.
Economists polled by Reuters also forecast euro zone inflation would edge down to 10.4 percent in November. They forecast inflation in the euro zone at 8.5 percent this year, 6.0 percent next year, 2.3 percent in 2024 and eventually reach the ECB’s 2 percent target in 2025.
According to reports, the European Central Bank’s Governing Council is expected to announce an increase in lending rates at its meeting on December 15, while making new forecasts for inflation and economic growth.