The President of the European Central Bank, Kristina Lagard, confirmed that the recent increase in the cost of the euro against the dollar not only reflects market conditions and estimates it, but also reflects the power of the eurozone economy.
“This reflection is not just an expression of market conditions, but also emphasizes the durability of our economy,” Lagarda said at the Centra Bank forum in St.
As for the path of inflation, Lagarda explained: “I am not saying that the task was fully fulfilled, but rather confirm that the goal can be achieved.”
She added that the European Central Bank managed to achieve the goal of inflation established by 2 percent, but it must remain in a state of vigilance from the ambiguity associated with the economic situation.
On Monday, Lagarda warned that uncertainty would remain a constant feature in the global economy, which could increase inflation fluctuations, and the European Central Bank claims more assertive measures to maintain price stability at the level of 2 %.
In her explanation of the changes, Lagarda indicated that the global environment after the pandemic has changed radically, since the companies changed their prices at a faster pace in the light of a new reality, characterized by uncertainty and constant shocks of supply.
Although expectations indicate the stability of inflation at this level in the coming years, Lagarda warned about potential risks with a change in the price behavior of companies.
She added: “Companies react faster to shocks – especially shocks of offers – as a way to protect their profits, which increases the flexibility of pricing strategies and makes prices more sensitive even to simple friction or local disorders.”
He also warned that the price reaction cannot be gradual, which means that inflation can quickly increase or decrease.
Lagarda emphasized the importance of early and decisive actions, whether in conditions of high or very low inflation, emphasizing that “the rapid tightening of monetary policy can prevent the formation of a whirlpool between prices and wages, and that a quick response to low inflation can reduce the period of interest rates at high levels.”
