Inflation: should the ECB intervene?

The inflation rate in the Eurozone climbed to 4.1 percent in October. Critics accuse the ECB of fueling this trend with its loose monetary policy, which involves pumping billions into money markets through bond purchases. ECB chief Christine Lagarde has now responded by calling for patience, saying that inflation will decline without intervention by the central bank.

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Corriere del Ticino (CH) /

Not a temporary phenomenon

The time for the financial markets to wake up from their dream world is approaching, Corriere del Ticino is sure:

“The sleeping pills were administered by the central banks, which continued to pump money into the economy even though inflation was picking up and growth was accelerating after the toughest months of the pandemic. To keep financial markets in a state of euphoria, monetary authorities argued that the price rise was only temporary, even though inflation was 6.2 percent in the US, 4.1 percent in the Eurozone and 1.2 percent in Switzerland. However, the notion of a temporary phenomenon seems less and less tenable as inflation has risen everywhere and even translated into wage increases in some countries.”

Le Monde (FR) /

A dangerous balancing act

The ECB should not make any rash moves, Le Monde says:

“History has shown that sustained inflation causes both an erosion of purchasing power - with the lowest earners being the first victims - and a loss in the value of money that eats into savings. ... The balancing act is dangerous: Acting too soon to prevent inflationary threats would risk undermining growth hard-won through unprecedented fiscal policies. But allowing prices to continue rising could create a mirage whose effects could be just as painful.”

Interia (PL) /

Poland cannot escape the trend

The Polish złoty has dropped to its lowest exchange rate in twelve years, causing a rise in the prices of imported products. Interia comments:

“The sharp depreciation of our currency is bad news not only for those who want to go on a skiing holiday abroad, but above all for belated attempts to curb rampant inflation. It's a warning from international investors abandoning the Polish currency to forget the idea of a 'strong złoty', because it's nothing more than the local currency of an emerging country whose price depends heavily on global capital flows. ... If things go on like this, the rapid weakening of the złoty will have a colossal impact on the Polish economy as well as private and state budgets.”