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September 6, 2021

Tightening Policy Too Early Can Be A Big Mistake - EU Commissioner

 European Union (EU) economic commissioner Paolo Gentiloni warned that tightening monetary policy too quickly would be a big mistake.


Speaking in an interview with Bloomberg Television, Gentiloni said they need to monitor inflation in the European Zone accurately, but not make decisions too quickly.


This is because, the rise in inflation is temporary in nature, and he said the move to tighten policy earlier would be a big mistake.



A string of inflation surges recorded last month in Europe, it has led markets to expect the European Central Bank (ECB) to reduce or at least give a hint on its bond purchases at this week’s policy meeting.


However, Gentiloni said Europe must avoid making the mistakes made during the financial crisis that occurred more than a while ago to return to normal more quickly.


In addition to Gentiloni, ECB Governing Council member Yannis Stournaras also warned not to react to the inflation surge.

With the rise of the Covid-19 epidemic, policymakers in the European Zone and the United States are considering inflation risks against the need to sustain economic recovery.