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Euro zone at risk of "inflation psychology", ECB's Lane says

Published 06/20/2022, 04:35 PM
Updated 06/20/2022, 04:41 PM
© Reuters. FILE PHOTO: European Central Bank Chief Economist Philip Lane speaks during a Reuters Newsmaker event in New York, U.S., September 27, 2019. REUTERS/Gary He//File Photo

LONDON (Reuters) - Record high euro zone inflation risked fuelling "inflation psychology," European Central Bank chief economist Philip Lane said on Monday, referring to a phenomenon when consumers and businesses adjust their habits in anticipation of higher prices.

Once inflation psychology sets in, consumers bring forward their spending to beat the rise in prices while businesses start lifting their own prices, expecting higher costs, with both behaviours perpetuating inflation.

"We have very high inflation rates now, and clearly we could be in a world where inflation psychology is taking hold," Lane told the annual dinner of Britain's Society of Professional Economists in London.

Latest comments

What's currently happening is that every business, no matter how unimportant, tries to raise prices at all costs. Have to try to book a travel or eat at a restaurant lately? It's insane. That's wild west in the middle of Europa.
lol stop to print 💰
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