Christine Lagarde admits: The high inflation will last longer in Europe.
(Photo: Reuters)
The sounds from the tower of the European Central Bank (ECB) are changing. It has been a month since ECB President Christine Lagarde was confident that the inflation is only a temporary phenomenon.
Before a committee of the European Parliament, Lagarde admitted that the problems with the supply chains could last longer. Rising energy prices could also fuel inflation further.
In the medium term, however, the President continues to assume that the targeted two percent will be achieved. But it does not say what the medium term is.
The three percent mark will be torn loose in Germany this year. Next year it’s still two and a half percent inflation. Economists have had to revise their inflation forecasts upwards more and more in recent months.
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In the USA, currency devaluation has long since become a political issue. US President Joe Biden is verbally making inflation, which is over six percent there, a top priority. There it is no longer a specialist topic, but rather hits the masses.
Consumers pay the higher prices
It is the same in Germany. The Federal Statistical Office is currently reporting rising agricultural prices. The wood prices have normalized somewhat, albeit at a high level and the chip shortage in the industry is taking longer than expected. That also goes into the prices.
Some economists who advocate loose monetary policy come up with the core inflation rate argument. You just have to factor out the volatile energy and food prices and inflation is no longer a problem.
Apparently, even the head of the ECB is no longer convinced that this story will be accepted. Otherwise her utterances can hardly be understood. After all, companies and consumers cannot figure anything out. You pay market prices.
Stability-oriented economists are also increasingly alarmed. They now fear second-round effects from higher wages, which will ultimately be reflected in product prices. And financial institutions complain – like now Deutsche Bank boss Christian Sewing – about the consequences of the negative interest rates that they have to pass on to their customers.
Despite all the resentment – Lagarde’s statements do not mean a U-turn, but she is on the alert. The inflation data from the USA and Germany cannot and must not leave you indifferent.
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