From the proceedings of the annual conference of the European Central Bank (Getty)
The priority now is to curb Inflation reigns which is more important than promoting economic growth. This is a summary The heads of major central banks around the world today, Wednesday, saying that lowering inflation around the world will be painful and may destroy growth, but it must be done quickly to prevent rapid price growth from becoming entrenched.
Inflation around the world has reached its highest levels in several decades due to jumps in energy prices and bottlenecks in supply chains after the pandemic.
president US Federal Reserve Jerome Powell “The process is very likely to involve some pain, but the worst pain will come from failing to address this high inflation and allow it to become permanent,” he said.
Echoing Powell’s words, President European Central Bank Christine Lagarde Low inflation in the pre-pandemic era will not return and the ECB has to act now because price growth is likely to stay above the 2% target for years to come.
Powell said that designing monetary policy tightening to avoid a recession in the US is certainly possible, adding that the path is narrow and that there are no guarantees of success.
In turn, Augustin Carstens, director general of the Bank for International Settlements, an umbrella group of central banks, said policy makers have taken the first step in recognizing they have a problem, adding that their task now is to tighten monetary policy while risks mount.
“They should try to prevent a complete transition from a low inflation environment to a high inflation environment that allows this high inflation to take hold,” Carstens told the ECB’s annual conference.
BoE Governor Andrew Bailey said the BoE was ready for further rate increases if high inflation persisted, but warned that the British economy was now clearly taking a turn and starting to slow.
German inflation slows to 8.2% in June 2022
Official data showed on Wednesday that inflation in Germany slowed in June, the first month in which the government took measures to cool fuel prices. The Federal Statistics Office said consumer prices in Europe’s largest economy rose 8.2% on an annual basis after an 8.7% increase in May.
Analysts polled by Archyde.com had expected inflation to rise in June to 8.8%. Energy prices in Germany were 38 percent higher in June than a year ago, driven by the war in Ukraine and continued supply chain bottlenecks.
In an effort to counter the increases in energy prices, the government lowered the fuel tax and introduced a ticket that allows travel around the country for 9 euros a month.
(Archyde.com, The New Arab)