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ECB’s Lagarde: We Need to Bring Rates Into “Sufficiently Restrictive” Territory to Lock in Our Policy Tightening

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Lagarde: Breaking the persistence of inflation

From ecb.europa.eu

Inflation in the euro area is too high and is set to remain so for too long. But the nature of the inflation challenge in the euro area is changing. We are seeing a decline in the inflation rate as the shocks that originally drove up inflation wane and our monetary policy actions are transmitted to the economy. But the pass-through of those shocks is still ongoing, making the decline in inflation slower and the inflation process more persistent. This persistence is caused by the fact that inflation is working its way through the economy in phases, as different economic agents try to pass the costs on to each other. ... (full story)

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