The new increase in December surprised some analysts who expect a drop after December reached the highest point since June 1992. Most economists believe that it will take time before the rate of inflation returns to its levels. and by 2022 they expect it to be above 3.0% on average once again.
Faced with this, voices are emerging asking for the European Central Bank (ECB) of a turn in its low-interest policy. This happens because the ECB announced since November that rate hikes are ruled out while receiving criticism from economists from different European countries who see how inflation hits their economies without any reaction measure.
Volker Wieland, a member of the German Government’s Advisory Council of Economists, said: “Ruling out an interest rate hike in 2022 is difficult to defend and is unnecessary,” Wieland said.
The ECB should, according to Wieland, take a turn in its policy as early as 2022, following the example of the FED, and not wait for 2023. Wieland directly criticized the communication policy of ECB President Christine Lagarde. “I am surprised that he justifies his expansive policy by saying that in 2023 and 2024 we will be below 2.0% again, as required by the inflation targets.”, He said.
“Given the flaws in the inflation forecasts, it seems very daring to link monetary policy to those forecasts,” he added.
For January, experts expect a lower inflation rate due to statistical effects. The prices will already be compared with those of the second half of 2020 when the temporary VAT reduction took effect. The Munich institute for economic studies IFO, however, forecasts an average inflation rate of 3.3% for this year and predicts that a normalization will only begin to be felt in 2023.
Many of the inflationary factors, such as energy prices and supply chain problems, will continue to have an effect in the coming months according to the IFO. The ECB’s expansionary monetary policy, with low interest rates, has been part of the strategy to promote the reactivation of the European economies.
The ECB defines a year-on-year inflation rate slightly below 2.0% as a target and with it it considers price stability guaranteed.
Source From: Ambito

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