Inflation Not yet Setting Off Second-Round Effects: Nagel
Philip Lane said demand destruction from higher energy costs could curb growth and reduce the need for additional European Central Bank tightening.
- On Monday, Bundesbank President Joachim Nagel reported Euro zone inflation is running at 3.8%, nearly double the European Central Bank's 2% target, speaking in Sorrento, Italy.
- European Central Bank chief economist Philip Lane warned on Monday that the 'second wave of the energy supply shock' poses upside inflation risks, with 'demand destruction' potentially limiting monetary tightening.
- Financial markets price in a 20% chance of an ECB interest-rate hike in October and an 80% chance in December, with traders expecting the 2.5% deposit rate to rise in coming years.
- Nagel warned that gas prices remain vulnerable due to low storage levels requiring higher winter volumes, while refining capacity destruction and drought threaten food prices.
- The ECB must remain flexible and base decisions on incoming data, according to Nagel, while Lane advocated for a measured 'middle path' response to keep inflation in check.
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Dnevni list Danas
n1info.rsThe sharp rise in energy prices, the rise in yields on government bonds and reduced fiscal support could slow down economic growth, and thus limit the scope of monetary tightening that the European Central Bank (ECB) needs to implement in order to curb inflation, the institution's chief economist, Philip Lane, said today.
Inflation in the euro area is high and high risks prevail, but the increase in energy costs has not yet been reflected in wages and other prices, said on Monday the president of the German central bank and member of the Council of the European Central Bank (ECB), Joachim Nagel. Annual inflation in the monetary bloc of 21 countries is currently at 3.8%, almost twice the target of 2% of the ECB, and can still increase, fuelling concerns that the h…
ECB's Lane: Drags on growth may limit need for ECB action
Surging energy costs, higher yields and shrinking budget support could all weigh on economic growth and may limit how much the European Central Bank needs to tighten policy to quell price pressures, Philip Lane, the bank's chief economist, said.
Global Market | High energy costs threaten eurozone inflation outlook: ECB's Nagel
Eurozone inflation stands at 3.8%, with Bundesbank President Joachim Nagel warning of upside risks from energy, food and refining costs. However, wage and price-setting remain contained, while long-term inflation expectations stay aligned with the ECB’s 2% target. Markets increasingly expect further ECB rate hikes, though Nagel urged flexibility.
Lane Urges Measured ECB Response to Second Wave of Energy Shock
A measured European Central Bank response is appropriate to control inflation as policymakers assess how a second wave of the energy shock affects the economy, according to Chief Economist Philip Lane.
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