European Central Bank Calls for Action Against Inflation
The European Central Bank is calling for quick action against inflation. The inflation rate shot up to 7.4 percent in the euro area recently, well above the ECB's target of two percent.
The European Central Bank is calling for action against inflation. / Picture: © Wikipedia / Norbert Nagel
Increasingly, the European Central Bank (ECB) is calling for quick action to combat high inflation.
The inflation rate shot up to 7.4 percent in the euro area recently, well above the ECB's target of two percent.
In the euro area, the Russian invasion of Ukraine had created a spike in uncertainty, as shown by the European Commission's uncertainty measure, emphasized by the ECB.
Due to the increase in energy prices, the increased uncertainty, and the new wave of supply disruptions caused by the war and the lockdowns in China, confidence indicators suggest a deterioration in the short-term outlook.
According to the ECB, however, a boost from tourism in the summer could support growth in the third quarter.
ECB Vice President Luis de Guindos expects inflation to remain high in the coming months. But because of the great uncertainty about price developments and the economy, monetary policy must proceed "gradually and cautiously," the Spaniard warned during a video appearance.
As a preliminary step, the multi-billion bond purchases are likely to be discontinued. The ECB has set its sights on ending the program in the third quarter, but some monetary watchdogs have recently suggested an end to the program at the end of June.
The ECB held a meeting in the mid of April concerning inflation in Europe and the world. At its next meeting on June 9, the ECB is expected to set the course for the interest rate turnaround.