Eurozone wages are rising faster than previously thought and the European Central Bank must prevent this from adding to already high inflation, ECB President Christine Lagarde told a Croatian newspaper.
The ECB has raised interest rates by a total of 2.5 percentage points since July in a bid to contain a historic rise in inflation and has promised further policy tightening at upcoming meetings as long-term price hike expectations term have started to exceed the 2% target.
“We know wages are rising, probably at a faster pace than expected,” Lagarde told Croatian newspaper Jutarnji list on Saturday. “We must not allow inflationary expectations to lose their anchor or wages to have an inflationary effect.”
Lagarde offered no policy suggestions in the interview, but said the bank must “take the necessary steps” to bring inflation down to 2% from its current rate of nearly 10%.
Croatia will join the eurozone on January 1 as the 20th member of the currency bloc, joining an elite club at a time of unusual turbulence as the ECB tries to tame inflation after spending the last decade to unleash unprecedented stimulus to revive price growth at an exceptionally low period level.
“We have to be careful that the internal causes we are seeing, which are mainly related to fiscal measures and wage dynamics, don’t lead to entrenched inflation,” Lagarde said.
Lagarde added that the bloc’s expected winter downturn, induced by rising energy costs, is likely to be short-lived and superficial, provided there are no further shocks.
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Source: Terra
Camila Luna is a writer at Gossipify, where she covers the latest movies and television series. With a passion for all things entertainment, Camila brings her unique perspective to her writing and offers readers an inside look at the industry. Camila is a graduate from the University of California, Los Angeles (UCLA) with a degree in English and is also a avid movie watcher.
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