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European Central Bank President Christine Lagarde said that ECB is likely to miss her 2 percent inflation in the future, as politics donors are forced to fight “extremely high” uncertainty.
A week after the central bank signaled a possible slowdown of reduction to borrow costs after the sixth time reduced its reference interest rate by quarter at 2.5 percent, Lynterda Warned that the environment became so difficult that it would be “impossible” to guarantee that “the inflation of the title will always be at 2 percent”.
The goal of the ECB would be to ensure that “inflation is always converging according to 2 percent in the medium term,” she said at a conference on Wednesday.
Lasrarde emphasized that the greater public borrowing of defense and infrastructure as well as potential A trade war that includes the US “It could feed directly into inflation and increase volatility.”
The euro area can be particularly vulnerable “because we are highly exposed to some new types of shock” because of its high dependence on global trade and energy imports, she warned. Larger shocks can come at risk that inflation might be nicer, she added.
The escalating tariffs, as well as a major impetus that fundes the debt to increase the cost of defense and infrastructure by Germany and other euro countries, could create a “new, two-sided shock” that can dim or accelerate inflation, said ECB President.
“The direction of shock is much harder to predict,” she said.
