ECB official warns interest rates may rise to fight high inflation
NATIONAL governments spending too much in the good years and the structure of the Eurozone itself are to blame for the current crisis, a top European Central Bank (ECB) official said yesterday, warning that the ECB will put up interest rates if it needs to keep inflation under control.
Economist Peter Praet told a banking conference “the Governing Council will be vigilant in order to contain upside risks to price stability.”
Praet reminded the audience that price stability is a core responsibility of the ECB, and that “monetary policy cannot address the root causes of the crisis; this can only be done by policy-makers at national level.”
The ECB has slashed interest rates and pumped €1 trillion of cheap cash into banks in the hope that this will ease short-term pressures and give governments room to boost economic competitiveness.