President of the European Central Bank Christine Lagarde looks on as she attends a Euro zone finance ministers meeting in Luxembourg, October 4, 2021. REUTERS/Yves Herman
October 5, 2021
FRANKFURT (Reuters) – The European Central Bank is closely watching inflation expectations and wage developments as predicting the length of disruptions caused the economy’s post-pandemic reopening is difficult, ECB President Christine Lagarde said.
“We should not overreact to supply shortages or rising energy prices, as our monetary policy cannot directly affect those phenomena,” Lagarde said in a speech.
“But we will pay close attention to wage developments and inflation expectations to ensure that inflation expectations are anchored at 2%,” she said.
Lagarde added that she still expected these “frictions” to be transitory, repeating the bank’s long-standing line that the inflation spike will abate next year.
(Reporting by Balazs Koranyi; Editing by Francesco Canepa)