Inflation alert from the European Central Bank

European Central Bank (ECB) President Christine Lagarde said inflationary pressures are high and there is no clear evidence that core inflation has peaked.

Lagarde spoke at the Monetary Dialogue session of the European Parliament (EP) Economic and Financial Affairs Committee held in Brussels.

Stating that economic growth in the Euro Zone almost came to a halt in early 2023, Lagarde claimed that economic activity was supported by declining energy prices, easing of supply bottlenecks and policies prosecutors.

ENERGY SUPPORT MUST END

“Governments must swiftly and harmoniously roll back relevant support measures as the energy crisis eases,” Lagarde said. he said.

Lagarde explained that maintaining energy support will increase inflationary pressures in the medium term and stated that in this case a stronger monetary policy may be required.

“Domestic demand, especially consumption, remains weak,” Lagarde said.

Noting that the manufacturing sector is still working with backlogs but expectations for the sector have deteriorated, Lagarde said the service sector has maintained its resilience, especially with the economy reopening after the epidemic.

Lagarde recalled that inflation fell after its peak last October and recalled that inflation in the Eurozone was 6.1 percent in May.

‘NO CLEAR EVIDENCE OF THE SUMMIT’

Explaining that price pressures remain strong, Lagarde said past increases in energy costs and supply bottlenecks continue to put upward pressure on core and core inflation, but they expect their gradual decrease.

While underlining that inflationary pressures remain high, Lagarde stressed that there is no clear evidence that core inflation has peaked.

Lagarde said that “high inflation is pushing people living in the euro zone” and that despite declining energy inflation, high food inflation continues to put pressure, especially on low-income people. income.

Noting that they are determined to fight inflation, Lagarde stressed that she raised interest rates by 25 basis points at their May meeting due to high inflationary pressures. (AA)