MNI BRIEF: De Cos Calls For Patience As Euro Inflation Rises

The spike in euro area inflation has been largely driven by pandemic-related factors that will fade out and in some cases disappear in 2022, Bank of Spain Governor Pablo Hernandez de Cos said in speech Monday, calling for patience and continued monetary accommodation.

While inflation has proved longer lasting than expected, he said there are as yet no indications that Europe is about to enter an inflationary spiral driven by higher end-prices and wage settlements.

There is only a very small likelihood of any inflationary surge such as that which followed the 1970s oil price crisis, he said, though he added: “that episode should serve as a reminder that economic authorities must be careful when finding the necessary balance between providing patient support to the recovery and simultaneously preserving the capacity to act swiftly should it prove necessary.”

As MNI has reported, higher inflation has already spurred more hawkish ECB officials to argue for more restrained monetary stimulus into next year.