Inflation tops ECON Committee meeting with ECB President Lagarde

During her last quarterly meeting of the year with the economic and monetary affairs committee, the President of the European Central Bank Christine Lagarde laid out some details of the ECB’s work on better factoring in house prices into the calculation of the Eurozone’s inflation rate. She also gave the usual assessment of the expected dynamics for the economy.

MEPs were particularly interested in quizzing Ms Lagarde on the best approach in the face of the current inflation rate which stands well above the ECB’s target. The committee was evenly divided with those MEPs on the right of the political spectrum saying that the ECB needed to rein in its accommodative monetary policy to check the inflation rate and those on the left warning Ms Lagarde not to repeat the approach adopted in 2011when the ECB tightened its taps at the first signs of rising inflation only to have to reopen them again very shortly afterward and having damaged economic recovery in the process. In this sense, some MEPs urged the ECB to change tack on its monetary policy whereas others said it should stay the course.

Most MEPs expressed support for the way the ECB is planning on going about integrating house prices into the Harmonised Index of Consumer Prices so that this cost is better reflected in the inflation rate. Questions were also asked about the ECB’s role in helping green the economy, on the role of credit rating agencies and the reliance on their assessments, on rising house prices, and on the Chinese economy, among others.

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