ECB’s Scicluna: Fair to Say Jury Still Out on Whether High Inflation Temporary

6 December 2021

By David Barwick – FRANKFURT (Econostream) – The European Central Bank remains undecided as to whether currently high inflation is indeed temporary, ECB Governing Council member Edward Scicluna said Friday.

In a speech at the Institute of Financial Services Malta's annual dinner, published late Friday by the Central Bank of Malta, which he heads, Scicluna said that domestic inflation projections would be hiked, especially for next year, but that despite more prevalent cost increases to local companies, there were no indications of second-round effects.

‘In the international financial markets there is no consensus whether the current inflation is transitory and that it will retreat to levels below Central Bank inflation objectives over the medium term or not’, he continued. ‘In any case, at the ECB, it is fair to say that the jury is still out. Within a fortnight at the Governing Council we should have a clearer picture of the outlook and the appropriate monetary policy decision is then taken.’

The gradual removal of Maltese policy support will ‘be quite challenging, at least no less than the ECB’s eventual reduction of its own asset purchase programme’, he said.

The Maltese Central Bank’s upcoming domestic growth projections would include ‘significant upward revisions’, he said, ‘based on better-than-expected recent economic and financial statistical data.’