Lagarde Sees Little Wage Pressure Going Forward

Q: Some of your colleagues have emphasised the upside risks to inflation. Is this view widely shared in the GC and what the discussion was like in this week's meeting? How much notice will you give markets before PEPP comes to an end?

- A: In many euro area countries people are feeling higher prices. We have to go under the skin of inflation in order to judge whether or not it is temporary, or will last. This results in our inflation outlook.

• Reopening of the economy, the German VAT increase, energy inflation, the carbon tax and supply bottlenecks and service sector inflation resulting from reopening are all contributing to higher inflation.
• These impacts will fade out over time. We are looking at the second-round impact on wage negotiations. That is what could fuel a more persistent and durable price increase going forward. On the wage front, we are not seeing much in the way of a significant increase. You will here more from me on PEPP, certainly at the December meeting.