Eit’s about time. As vigorous as America’s Federal Reserve is in fighting inflation at the moment, the European Central Bank seems hesitant. For far too long, the central bank of the euro area has stuck to the theory that inflation is only temporary and not permanent. Since it still needs a serious processing of the error.
In any case, at the next meeting of the ECB Council, a sharp increase in interest rates is urgently required. Economists are right to warn that inflationary pressures will remain high even if Europe’s economy slips into recession. The gas prices, which continue to rise, will ensure this.
However, the longer high inflation rates persist, the greater the risk that people will adjust to rising inflation expectations and inflation to become entrenched. It is essential to avoid this. The central bank’s mandate calls for restoring price stability. Everything else has to take a backseat to the central bankers.
However, the longer they wait with stronger interest rate hikes, the more it will hurt.
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