Eurozone consumer prices have increased at a record pace, presenting a significant challenge for the European Central Bank which maintains its stance that inflation will decrease later this year.
Christine Lagarde was grilled by German news outlet RND for her reported lack of action in tackling the cost of living crisis.
The RND reporter asked Ms Lagarde, with eurozone inflation at the highest it’s been, why does she not act faster.
She replied: “First of all, we need to understand where the price increase is coming from. A good half is due to the sharp rise in energy prices. Oil, gas and electricity have become more expensive. And since we import a lot of it, these prices are sort of outside the sphere of influence of our economy.
“The second major price drivers were supply bottlenecks: too few microchips, container traffic jams, interrupted supply chains. Now I ask you: what can the ECB do about it? Can we fix supply bottlenecks? Can we transport containers, lower the price of oil or settle geostrategic conflicts? No, we can’t do all that”.
The reporter responded: “You could fight inflation by raising interest rates”.
Ms Lagarde said this “would not solve any of the current problems”, but acting hastily could, on the contrary, make our economies “recover significantly worse and jobs would be at risk”.
When questioned on whether there was an alternative to the low-interest policy rate – which saw some people lose tens of thousands – she responded: “We already had negative interest rates when the Corona crisis hit. By raising interest rates we would have driven the economy straight into the wall.
“As a result, we would have added a financial crisis to the pandemic and economic crisis. We avoided that.”
READ MORE: Outrage at ‘virtue signalling’ Trudeau – Canadian PM betraying trucker
When asked why the eurozone hasn’t followed in the footsteps of the UK and US banks by increasing interest rates, she said the situation in the two countries does not compare.
She said: “In the USA the economy is overheating, in our country it is far from doing that. That is why we can and must proceed more cautiously. We don’t want to stall the economy”.
Inflation in the eurozone hit 5.1 percent last month, with the European Commission predicting it to average 3.5 percent this year, which is well above the European Central Bank’s target of 2 percent.
Additional reporting by Monika Pallenberg.
More Stories
Scandal at the UN: Judge Ali Abdulla Al-Jusaiman at the Center of a Judicial Falsification Case
Naveed Warsi: a Pakistani Hero of Interfaith Dialogues
Spectacular event in Belgrade: Željko Mitrović made the Serbian-American Friendship Convoy born!