High inflation looms over ECB meeting

  • Date: 06-Sep-2021
  • Source: Kuwait Times
  • Sector:Economy
  • Country:Kuwait
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High inflation looms over ECB meeting

FRANKFURT: Rising eurozone inflation will provide the backdrop for the meeting of European Central Bank governors Thursday, with markets hoping for hints of when policymakers might start easing their massive pandemic-era stimulus. As the economic recovery gathered steam in the 19-nation club, consumer prices rose at a pace not seen in the past decade, reaching three percent in August-well above the ECB’s new two-percent target.

ECB president Christine Lagarde previously promised to “look through” the surge and policymakers expect the rate to rise even further in coming months before falling back. “We are more worried about the inflation rate being too low in the medium term rather than too high,” Isabel Schnabel, a member of the ECB’s executive board, said last month. The ECB considers the jump in consumer prices to be driven by one-off, pandemic-related effects as energy prices recover and policies aimed at mitigating the economic impact are rolled back.

As such, observers do not expect the ECB’s governing council to adjust historically low interest rates or announce any significant change to their colossal bond-purchasing program, despite some grumbling among its 25 members. Jens Weidmann, the president of the German Bundesbank, urged the ECB in August not to ignore the