The European Central Bank (ECB) could be underestimating inflationary risks, said several conservative authorities, a few hours after the entity extended the stimulus measures that will continue to drive pressure on prices.
Inflation has beaten even the most pessimistic forecasts in recent months and the ECB nearly doubled its projection for 2022 on Thursday, but continued to argue that longer-term price pressures are insufficient and that price growth could return to fall below your 2% target later on.
Bundesbank President Jens Weidmann expressed doubts about these projections, warning that the ECB could be ignoring inflationary risks from rising wages and the transition to a climate-neutral economy.
“Risks to the inflation rate are biased upward, both in Germany and in the euro zone as a whole”Said Weidmann, who will step down as head of the German central bank at the end of this month. “Policy makers should not ignore these risks. We have to be vigilant”.
Weidmann, a veteran critic of the ECB’s lax policy, said German inflation is expected to remain above the ECB’s target for years to come.
On Thursday, the ECB agreed to end an emergency stimulus plan next March, but stepped up another bond buying program and essentially ruled out a rate hike in 2022, guaranteeing minimum rates in the coming months.
Lithuania’s head of economic policy, Gediminas Simkus, backed Weidmann’s warnings, warning that inflation could end up exceeding the 1.8% that the ECB forecasts for 2024.
“The balance of risks is tilting towards higher inflation, due to omicron, uncertainties and lasting shocks on the supply side, rising energy prices and contagion to producer prices. And this means that the risks of GDP growth are to the downside.“, he claimed.
.
Ricardo is a renowned author and journalist, known for his exceptional writing on top-news stories. He currently works as a writer at the 247 News Agency, where he is known for his ability to deliver breaking news and insightful analysis on the most pressing issues of the day.
