Frankfurt (Germany), September 29: The European Central Bank (ECB) on Tuesday played down the pressure of inflation surge in the euro area and reaffirmed its resolve to keep the monetary policy accommodative to support economic recovery.
In a speech made here at ECB's annual forum on central banking, the ECB President Christine Lagarde said the uptick of inflation in the euro area was largely due to "exceptional effects" and the central bank would stick to its current stance to bolster the economic recovery which is "atypical."
The inflation rate went up to three percent in August and is set to rise further, exceeding the target of two percent set by the ECB.
Lagarde dismissed the concern by explaining that the factors driving up prices were transitory. She attributed the soaring prices to supply bottlenecks. It is harder to predict how long supply chain disruptions will last, she added.
"For now, we see no signs that this increase in inflation is becoming broad-based across the economy," she said.
Lagarde insists that the ECB forward guidance on interest rates is well-suited to manage supply side risks.
The monetary policy will continue to provide the conditions necessary to fuel the recovery in terms of supporting demand, Lagarde said.
Source: Xinhua