ECB’s Escrivá: We Might Already Be at Last Yard of Inflation

27 September 2024

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member José Luis Escrivá said on Friday that the euro area might be very close to the end of high inflation.

In a presentation for the Hydra Conference in Mallorca, Escrivá, who heads the Banco de España, said that the last mile of inflation ‘could be harder to walk’ but ‘maybe we are already at the last yard’.

According to slides provided, he said that ‘real interest rates have risen as inflation declines, thus increasing the degree of monetary policy tightening’, and that ‘a closing policy gap with the US may impact exchange rates via upward pressures’.

The flip side of an immaculate disinflation is that when inflation is back at low levels, the sacrifice ratio, which indicates the trade-off between economic output and the reduction of inflation with tighter policy, increases again, he said.