ECB’s Makhlouf: Impact of High Inflation Would Be Worse if We Delayed Tightening

14 September 2022

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Gabriel Makhlouf on Wednesday said that the negative effects of high inflation would only become worse if the ECB deferred the tightening of monetary policy.

In a speech at the Dublin Chamber of Commerce, Makhlouf, who heads the Central Bank of Ireland, said, ‘While there is some evidence that the supply-chain challenges many industries experienced during the pandemic have eased, the continued high level of both energy prices and uncertainty presents significant challenges.’

Core inflation indicates that there has been considerable spillover of higher prices for energy and commodities into other goods and services, he said.

The ECB is acting to restore price stability so as to mitigate the negative impact of high inflation on real incomes and the sustainability of economic growth, he said.

‘A pivot to further tighten monetary policy has been necessary, as history has taught us that these issues will only be exacerbated if we delay action’, he said. ‘Raising interest rates is absolutely necessary as persistent inflation is damaging to macroeconomic stability and the community’s longer term living standards.’