ECB vice -president Luis de Guindos on Wednesday came forward to give the latest signs of inflation to the market by saying inflation that the european zone will take longer to return to target levels than previously expected. At the same time, so far there is no evidence that employee wage data will affect inflation.
This high inflation will present a challenge to the ECB which is less experienced in dealing with rapid price growth and this will obviously complicate decision -making among policymakers on 16 December.
However, the ECB still maintains their view that inflation is temporary and will return below target on its own. Nevertheless, more among policymakers voiced their concerns that it could lead to the ECB to curb the stimulus package.
De Guindos acknowledged that inflation risks are “moderately” likely to rise and the fall will be slower than previously predicted. "We are fully confident that inflation will start to decline early next year and in the second half of next year inflation will start to decline further until it returns to the target level of 2%," de Guindos told the conference.
Inflation has hit 4.9% last month which is a record high. Thus most private forecasters do not see it return below the ECB’s 2% target until the end of 2022.
