Inflation Concerns Could Harm Economy, Says ECB’s Cipollone to Corriere
Cipollone warns that excessive inflation worries may hinder economic growth and stability
Piero Cipollone, European Central Bank, Inflation, Corriere della Sera, Economic Growth, Europe
Rome: So, Piero Cipollone from the European Central Bank recently shared some thoughts with Corriere della Sera. He mentioned that being overly worried about inflation can actually hurt the economy.
He pointed out that trying to keep demand low to avoid inflation might backfire. Instead of helping, it could weaken our economic potential and actually increase inflation pressure.
Right now, the ECB is figuring out how to adjust borrowing costs for 2025. After a few rate hikes this year, they’re looking to lower the deposit rate from 3% to around 2% by mid-next year since inflation is getting closer to their target.
But not everyone is on the same page. Some policymakers are cautious about cutting rates too quickly. They’re worried about wage growth and geopolitical issues that could push prices back up.
Cipollone believes that the ECB shouldn’t be overly cautious about future inflation. Instead, it should focus on boosting the economy without forcing it, as that could raise inflation expectations.
There’s a bit of a debate among ECB officials about what the right borrowing cost should be. Some think they’re close to a neutral rate, while others see room for more easing.
Cipollone warns that keeping the economy below its potential is risky. He argues that a stronger economy can better handle future price shocks, leading to less stress overall.
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