European Central Bank (ECB) President Christine Lagarde (C, Rear) and Bank of Latvia Governor Martins Kazaks (R, Rear) attend a conference hosted by the Latvian central bank in Riga, Latvia, on Nov. 3, 2022. Leading economists who spoke at the conference in Riga on Thursday foresaw a mild recession in the eurozone but warned that it will not suffice to curb inflation. (Photo by Edijs Palens/Xinhua)
RIGA, Nov. 3 (Xinhua) -- Leading economists who spoke at a conference in Riga on Thursday foresaw a mild recession in the eurozone but warned that it will not suffice to curb inflation.
European Central Bank (ECB) President Christine Lagarde told the conference hosted by the Latvian central bank that the ECB needs to find an interest rate that will help keep euro-area inflation at 2 percent. Achieving this target would help to achieve price stability, she said.
Lagarde said she expected a mild recession for the eurozone, which is unlikely to significantly help the fight against inflation.
The ECB chief also warned against any measures that might stimulate demand. Therefore, the central bank must no longer stimulate the market like it did during the times of the COVID-19 pandemic, she said.
"Inflation expectations must be anchored and stabilized," Lagarde said.
Bank of Latvia Governor Martins Kazaks expected the looming recession to be shallow and short-lived and therefore insufficient to curb the persistent price hikes.
He said that after a prolonged period of excessively low inflation, eurozone inflation surged above 10 percent in October, while core inflation hit 5 percent.
Kazaks put this down mainly to supply-side effects, particularly the rise in energy and food prices. But he also expected a growing influence of demand side effects.
Kazaks believes that monetary policy should become stricter to curb the inflation and that interest rates will have to be raised much higher to reach the 2 percent medium-term inflation target.
"It seems to me that there is no need to pause at the end of the year. (Interest) rates should continue to be raised next year until the rise of inflation, especially core inflation, slows down significantly," he said. ■
European Central Bank (ECB) President Christine Lagarde attends a conference hosted by the Latvian central bank in Riga, Latvia, on Nov. 3, 2022. Leading economists who spoke at the conference in Riga on Thursday foresaw a mild recession in the eurozone but warned that it will not suffice to curb inflation. (Photo by Edijs Palens/Xinhua)
Bank of Latvia Governor Martins Kazaks attends a conference hosted by the Latvian central bank in Riga, Latvia, on Nov. 3, 2022. Leading economists who spoke at the conference in Riga on Thursday foresaw a mild recession in the eurozone but warned that it will not suffice to curb inflation. (Photo by Edijs Palens/Xinhua)