FRANKFURT (Reuters) – The recent jump in eurozone inflation has supply disruptions as a structural driver, and the European Central Bank should be on the lookout for any signs of rising wages, ECB Vice President Luis de Guindos said. in this Monday.
The ECB officially expects eurozone price increases, which reached 3.4% last month, to slow to below the 2% target next year, but many inside the bank fear inflation will prove more persistent. .
De Guindos repeated the ECB’s projections but warned that some of the factors of the recent rise in inflation, such as supply bottlenecks and higher energy costs, were having a “structural” impact and could affect workers’ expectations and wage demands.
“This increase in inflation is not only responding to base effects, but there is also a component that will have a more structural impact,” said de Guindos at an event in Spain.
“This is having an impact that goes beyond what we expected just a few months ago.”
He added that the ECB’s monetary policy response would have to change if inflation becomes permanent as a result of these factors lasting longer than expected or starting to have an impact on wage negotiations.
De Guindos said that if economic activity normalizes and the pandemic recedes, the ECB’s Pandemic Emergency Purchase Program (PEPP) “will have fulfilled its mission”.
(By Francesco Canepa)
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