European Central Bank President Christine Lagarde said that eurozone wages are growing faster than previously thought and that the ECB should prevent this from adding to already high inflation.
The European Central Bank has raised interest rates by a total of 2.5 percentage points since last July, in an effort to stem the historic rise in inflation, and pledged more monetary tightening at its upcoming meetings, at a time when long-term price growth expectations are starting to exceed the target rate of 2%.
“We know that wages are increasing, perhaps faster than expected. We must not allow inflation expectations to affect prices in the long term, or for wages to have an inflationary effect,” Lagarde was quoted as saying by the Croatian newspaper “Jutarni List” on Saturday.
Lagarde did not hint at any new action during the interview, but said the bank should “take the necessary measures” to bring inflation down to 2% from its current rate of close to 10%.
She added that the expected winter recession in the European Union, caused by rising energy costs, is likely to be short and insignificant, provided that there are no additional shocks.
