Because the ECB's rate hike is the right cure for inflation

Because the ECB's rate hike is the right cure for inflation

At the Sintra forum, the president of the ECB clarified the motivation for the recent rate hike, arguing that the dynamics of inflation, especially the underlying one, cannot leave room for a complacent attitude. In the speech of Christine LagardeIn reality, there is nothing new compared to what has recently been explained and already discounted by the markets. The statements by the Italian government are therefore surprising, harshly criticizing the ECB's decision despite agreeing that inflation is harmful and acts as a hidden and unfair tax. Raising interest rates is the instrument of monetary policy, not a "simplistic recipe", but the only lever available to a central bank to which politics has given a precise mandate: price stability. The decision to raise rates is due to an accurate diagnosis in which the persistence of underlying inflation demonstrates that the persistent inflationary surge is due not only to supply factors (the energy shock) but also to those of demand. We have already explained several times in these columns that the narrative that the observed inflation is “only due to rising energy prices” is simply wrong. And we reiterate it here.

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