The inflation rise is set to continue till the year’s end, de Guindos of the European Central Bank said during his interview staged for Monday. He said this is a medium-term projection and, therefore, based on certain circumstances, inflation is being permitted to spiral upward.
The Spread of the COVID-19 Delta Variant Calls for a More Careful Measure
The Vice-President cited the recent extensive spread of the COVID-19 Delta variant as the reason that careful and sensible measures should be taken so that they don’t focus on preventing inflation rise and end up losing the economy.
COVID-19 Stimulus Will Gradually Be Removed
As reported by CBNC, the European Union had announced its intention earlier in the year to push out about 750 billion-euro worth of fiscal stimulus to help to boost the economy of its 27 member countries. This was confirmed in the interview and there was an affirmation that the EU is carrying out a lot of monetary stimulus, and removal of such stimulus must not be too hasty.
More Forceful Measures to Aid the Economy Will Be Implemented
There are going to be more forceful activities since the economy is still in the lower bound, de Guindos says, and that there will be more briefing by next week at the meeting of the European Central Bank on what will be done going forward. He further stated that in subsequent meetings, the time of when the PEPP acquisition will be scaled back will be announced.
Potential Effect on the Euros
If the inflation rise continues throughout the year, this will cause an increase in goods and services, thereby reducing the buying power of the Euros and subsequently its value.
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