Member of the Board of Governors of the European Central Bank (ECB) Martins Kazaks assumes that a number of factors can dispersed prices in the European Union (EU) more than those who were expected by local monetary authorities. According to him, inflation may exceed a forecast for several tenths percent, Bloomberg reports.
Confident restoration of the region’s economy and constant supply problems indicate that prices in Europe will grow faster than planned. The ECB last week revised his inflation forecasts until 2023 and reduced the purchase of bonds, as the infusion of money in the economy would cause even greater increase in prices. However, the key rate, despite the restoration of the markets, the regulator left at the same level. The decision of the ECB Martins Kazaks explained that the economy still needs monetary support. The consequences of the pandemic are still affected by many industries, which is why the liquidity of the markets should be ensured. The financier promised that the anti-crisis policy would cancel as soon as the situation improves enough.
“If there are no new shocks due to COVID, then in the medium term there is some inflation growth potential,” the President of the Central Bank of Latvia Martins Kazaks predicted. He warned what he was talking about the “tenths of percent” and until he sees inflation at the level of two percent of the OCB goal. Another member of the Board of Governors Gabriel Mahluf agrees with him. He stated that concerns about excessive inflation in the eurozone are exaggerated, but advised politicians to keep vigilance.
Rising prices in Europe reached 3 percent, which is the maximum indicator over decades. The authorities consider this jump temporary and expect inflation at a level of 2.2 percent this year and slowdowns up to 1.5 percent to 2023.