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Lagarde asserts that the ECB must prevent rapid wage growth from causing inflation

According to ECB President Christine Lagarde, wages in the euro zone are rising more quickly than previously anticipated, and the European Central Bank must stop this from driving up inflation even further.

 

In an effort to stop an unprecedented rise in inflation, the ECB has increased interest rates by a total of 2.5 percentage points since July. As longer-term price growth expectations have begun to rise above its 2% target, the ECB has promised even more policy tightening over its next few meetings.

 

We are aware that wages are rising, most likely more quickly than we had anticipated, Lagarde told the Croatian newspaper Jutarnji list on Saturday. ‘We must prevent the de-anchoring of inflationary expectations and the inflationary impact of wages.’

 

Lagarde said in the interview that the bank must ‘take the necessary measures’ to bring inflation down from its current level of close to 10% to 2%. However, she did not offer any new policy hints.

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