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Lagarde sees a greater risk of a recession but denies it will lower prices

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European Central Bank (ECB) President Christine Lagarde has given this warning on Friday The risk of a recession in the euro zone is more acute and has been described as “likely”. A decline in the region’s economy Inflation will come down a lot in the short term. The agency intends to continue with interest rate hikes – currently at 2% – to stem the rise in prices, which hit a historic high of 10.6% in October.

Lagarde expressed these thoughts in the framework of the XXXII European Banking Congress at the Alte Oper in Frankfurt. In his speech, he emphasized that the inflation outlook will determine how much and how quickly issuers raise interest rates, which is the main tool for adjusting the entity’s monetary policy. However, they are not alone and in view of the Governing Council meeting in December, the organization Determine how to modify the debt purchase program to reduce bond holdings.

“Although recent GDP growth figures have surprised on the upside, the risk of a recession has increased,” remarked Lagarde, who also wanted to underline the ECB’s significant commitment to ensuring that inflation expectations remain high while inflation remains high. “We are committed to reducing inflation to our medium term objective and We will take necessary steps for that“, has settled.

In this context, the President of the ECB has reminded governments that their Fiscal policy should be “temporary, focused and adaptive”.. temporary, so as not to put too much pressure on demand in the medium term; Targeted, so that the size of the fiscal stimulus is limited and benefits those who need it most; and adapted so that it does not weaken incentives to reduce energy demand.

According to Lagarde, when it comes time for national governments to consolidate their fiscal policies, it will make a difference if they do so by reducing transfers and public consumption and raising taxes or reducing public investment. If they choose the latter method, as they did after the Great Financial Crisis, “there is Risk that the offer will not be recovered And growth restrictions will remain binding,” the ECB president warns.

Source: lainformacion.com

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