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MNI BRIEF: Disinflation Return Unlikely Despite War - Lagarde

(MNI) London
(MNI) London

Disinflationary dynamics are disappearing, ECB President Lagarde says.

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The disinflationary dynamics of the past decade appear increasingly unlikely to return, European Central Bank president Christine Lagarde said in a speech Wednesday, but consumption and investment are both still below their pre-crisis levels, while the war in Ukraine has tempered growth rates at the same time as further pushing up inflation, creating a challenge for central banks.

As reported by MNI (MNI SOURCES:ECB To Hold Course For Tightening Amid Uncertainty), flexibility and gradualism will be key to ensuring both price stability and the smooth transition of monetary policy to normal, she said. “Actions that demonstrate our commitment to price stability will be critical to anchor inflation expectations and contain second-round effects,” Lagarde said.

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The disinflationary dynamics of the past decade appear increasingly unlikely to return, European Central Bank president Christine Lagarde said in a speech Wednesday, but consumption and investment are both still below their pre-crisis levels, while the war in Ukraine has tempered growth rates at the same time as further pushing up inflation, creating a challenge for central banks.

As reported by MNI (MNI SOURCES:ECB To Hold Course For Tightening Amid Uncertainty), flexibility and gradualism will be key to ensuring both price stability and the smooth transition of monetary policy to normal, she said. “Actions that demonstrate our commitment to price stability will be critical to anchor inflation expectations and contain second-round effects,” Lagarde said.