Lagarde Warns of Further Inflationary Effects
European Central Bank President Christine Lagarde said the ECB is still monitoring the risks of further inflationary effects, particularly after energy and transportation prices rose again.
Lagarde emphasized that the direct impact of the price increases is already visible. Rising energy prices, for example, can directly impact production and transportation costs.
However, the ECB does not yet see any second-round effects. This means that the price increases have not yet spread more widely, resulting in demands for wage increases, service price increases, or more permanent price adjustments across various sectors.
This statement signals that the ECB remains cautious in interpreting inflationary pressures. Despite rising energy prices, the central bank has not yet seen strong evidence that inflation will persist for longer in the eurozone economy.
As a result, the euro could experience limited movement because the ECB has not yet sounded overly hawkish. If the risk of further inflation remains low, the likelihood of additional interest rate hikes could diminish. However, if oil prices continue to rise and begin to trigger further effects on wages and prices, the ECB could reopen the scope for tighter policy. (arl)
Source: Newsmaker.id
