European Central Bank President Christine Lagarde told a Croatian newspaper 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 July in an effort to stem a historic surge in inflation, and has pledged more monetary tightening at its next meetings as long-term price growth expectations start to exceed its 2 percent target.
“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 percent from its current rate of close to 10 percent.
Lagarde added that the expected winter recession in the European Union, caused by higher energy costs, is likely to be short and insignificant, provided that there are no additional shocks.