ECB’s Makhlouf: Core Eurozone Inflation Shows Spillover of Energy, Commodity Price Rises

25 July 2022

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Gabriel Makhlouf on Monday said that core measures of inflation demonstrated that higher price rises for raw materials had affected a much wider range of goods and services.

In a blog post on the website of the Central Bank of Ireland, which he heads, Makhlouf, who concentrated on fiscal policy, said that the ECB’s ‘aim is to dampen the inflationary pressures that we’re seeing in the euro area and achieve our target of 2% inflation over the medium term.’

Eurozone headline HICP is ‘undesirably high’, and core measures indicate that ‘initial price pressures in energy and commodities have spilled over into many of the everyday goods and services we consume’, he said.

‘As monetary policy normalises – and the Governing Council signalled this process would continue at future meetings – financing costs will increase’, he said.

Reducing public debt has to be a priority, he urged, ‘not least because, as interest rates rise, financial markets are more likely to increase the focus on fundamentals such as relative debt levels when pricing sovereign bonds.’