Great inflation uncertainty, says Holzmann (ECB) | Photo credits: OeNB
VIENNA, Jan 23 (Reuters) – There is “great uncertainty” about how long inflation will stay well above the European Central Bank’s (ECB) target of around 2%, Robert said. Holzmann, member of the Governing Council of the ECB, during an interview with the newspaper Die Presse published on Sunday.
The ECB has long estimated that inflation will fall this year from its current record level, a view that its president Christine Lagarde reaffirmed on Friday.
Eurozone inflation hit 5% in December, more than double the ECB’s target, but the bank sees it falling back below 2% by the fourth quarter.
“It is not yet ruled out that this will happen. However, we also do not know whether inflation will ultimately remain at a higher level,” said Robert Holzmann, Governor of the National Bank of Austria.
“So is inflation a mountain or is it becoming a high plateau? There’s a lot of uncertainty about that because it can’t be reproduced very well by our models either,” he said. he also pointed out to the Austrian newspaper Die Presse.
Secondary effects such as wage increases would be major, he added while stressing, like Christine Lagarde, that there was for the moment no sign of a price-wage spiral, but that much would depend salary negotiations this year.
“Basically, therefore, there is the danger of a wage-price spiral. I think, however, that workers’ and employers’ representatives are acting here in a very rational and considered way.” (Report François Murphy, French version Benjamin Mallet)