ECB’s board member: Be diligent to reduce inflation

Croatian central bank governor Boris Vujicic wants the European Central Bank (ECB) to continue tightening monetary policy as long as inflation remains high.

“Inflation is significantly higher than our target, and as long as this is the case, the ECB needs to hold back. We need to get it back to the level we want in the medium term,” says Vujcic, who is also a member of the ECB’s board.

Next month, the ECB is expected to raise interest rates by another 50 basis points to curb inflation. That’s still more than four times the ECB’s target of 2 percent annual growth. By making debt more expensive, the central bank tries to control demand in the economy, which should reduce inflation.

New inflation figures for the Eurozone will be released later this week. Core inflation is expected to remain at a record high. Inflation in the US was higher than expected last Friday. That is why the central bank will also tend to raise interest rates in the long run.