Surging inflation across the European Union should be a clear signal to policymakers and central bankers that the time to stop financing public-debt binges was yesterday. Most likely, the continent is heading into a period of stubborn inflation that will be familiar to anyone who lived through the 1970s.
MUNICH – Although the US Federal Reserve is now thinking about tapering its monthly asset purchases in light of increasing inflation figures, European Central Bank President Christine Lagarde continues to insist that no sustained inflation risk exists. The currently measured inflation, she says, is a temporary problem that will disappear once supply bottlenecks are overcome, so the ECB will not be changing its policies. It is like a coachman who refuses to tighten the reins when his horses are bolting, because they will eventually tire themselves out.
MUNICH – Although the US Federal Reserve is now thinking about tapering its monthly asset purchases in light of increasing inflation figures, European Central Bank President Christine Lagarde continues to insist that no sustained inflation risk exists. The currently measured inflation, she says, is a temporary problem that will disappear once supply bottlenecks are overcome, so the ECB will not be changing its policies. It is like a coachman who refuses to tighten the reins when his horses are bolting, because they will eventually tire themselves out.