Era of ultra-low inflation unlikely to return: ECB’s Chief

LISBON: Christine Lagarde, president of the European Central Bank (ECB), declared that the world "will not return to the low-inflation environment" that existed before the Covid-19 outbreak.

She remarked at the ECB annual event, held in Sintra, west of Lisbon, "There are forces that have been unleashed as a result of the epidemic, and thus enormous geopolitical shock that we are facing right now, that is going to transform the framework and the situation in which we operate." 

The ECB President, on the other hand, emphasised that the eurozone's unemployment rate is at historic lows and that this is an indication that an economic recovery is already under way, as per reports.

State governments could assist the "most vulnerable" without piling up debt by providing "generalised" aid to "indiscriminate portions of the population," said Lagarde.  The head of the ECB emphasised that nations must implement "budgetary policies," which are not monetary in nature, to assist people who are most vulnerable to increases in prices and interest rates.

Jerome Powell, the chairman of the US Federal Reserve (FED) said, "it is not known if we will go back to what we had previously," which was "a period of disinflationary forces at a global level" brought on by "globalisation, an ageing population, poor productivity, and technology."

Powell said, the North American economy is "strong" and resilient enough to weather the effects of the rising interest rates that have been determined in recent months. He claimed that in order to "slow growth and give supply a time to rebound," the Fed would keep raising interest rates.

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