European Central Bank President Christine Lagarde said that Eurozone wages are growing faster than previously thought and that the bank must prevent this from adding to already high inflation.
“We know that wages are increasing, perhaps faster than expected, and we must not allow inflation expectations to affect prices in the long term, or for wages to have any inflationary effect,” Lagarde was quoted as saying by the Croatian newspaper ‘Jutarni List’, reports a local Arabic daily.
Lagarde did not hint at any new action during the interview, but said the bank should take the necessary measures “to bring inflation down to 2 percent from its current rate, which is close to 10 percent.”
It says that the expected winter recession in the European Union, caused by high energy costs, would be short and ineffective, provided that there are no additional shocks.
The European Central Bank has raised interest rates by a total of 2.5 percentage points since July, in an effort to stem the historic rise in inflation, and pledged more monetary tightening during its upcoming meetings, at a time when long-term price growth expectations are beginning to exceed the target rate of 2 percent.