Christine Lagarde (ECB) refuses to talk about “stagnant inflation”

Christine Lagarde (ECB) refuses to talk about "stagnant inflation"

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It was March 30, almost a month after the start of the Russian invasion of Ukraine. This was stated by the President of the European Central Bank “The longer the war lasts[it]the financial cost ser[aient] the higher and the greater the probability of an unfavorable prospect[it] large “.

“With an appropriate political response, we can mitigate the economic consequences of war and manage the high levels of uncertainty we face.”estimated, at the same time, Christine Lagarde.

Then defining “stagflation” as “A recession in the economy on a permanent basis and high inflation, which continues to grow”, the ECB’s boss felt that the latter could be avoided.

“The current situation can not be compared to that of the 1970s”

“While the unusual degree of uncertainty could mean a combined slowdown in growth and high inflation, the current situation cannot be compared to that of the 1970s.” confirmed, on May 7, in the Slovenian newspaper.

His script “Stagnant inflation” is not “is not our report at the moment” continued Christine Lagarde. Admittedly, the oil shock had also caused the economy to collapse, but inflation was much higher than it is now. Especially because, unlike fifty years ago, “We do not see (…) today” wage increases in response to inflation.

This war “It is above all a human tragedy” which also has “Economic consequences beyond Ukraine” : she “Burdens growth and fuels inflation”, insisted former Economy Minister Nicolas Sarkozy.

The European economy is “de facto stagnant,” says another

It also does not say whether the European institution based in Frankfurt, Germany will raise its key interest rates. And even if there is a timid growth of 0.2% in the first quarter of 2022, the European economy “De facto stasis”, said Fabio Panetta, Member of the Executive Board of the ECB, in an interview with the Italian newspaper La Stampa 5th of May.

This framework of sluggish growth and rising prices “Complicates options” guardians of the euro, why “Monetary tightening to curb inflation would end up already weakening growth.” predicted the latter, ranks among the “pigeons” who are experienced in a policy of supporting the economy, in contrast to the “hawks” who are themselves in favor of an inhospitable policy.

Remarks that contradict the most voluntary of two of the most prominent members of the Executive Board of the European Central Bank, highlighting the discrepancies in the assessment within it. “In my opinion, an increase in interest rates is possible in July”, had backed Isabel Schnabel in a daily interview Handelsblatt released on May 3rd.