Local view for "http://purl.org/linkedpolitics/eu/plenary/2008-07-09-Speech-3-026"
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"en.20080709.2.3-026"2
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"Madam President, I wish to commend the rapporteur on his work.
An annual report can speak volumes about achievements and also about policy intricacies and trade-offs. The current inflation rates in Europe are tormenting policymakers and citizens. The European Central Bank has built up its credibility through consistent policies. This performance has been enhanced by this inflation import on the wave of globalisation and the Asian economic rise.
Unfortunately, a reverse situation is under way nowadays because of huge energy and food price rises which reflect the increasing scarcity of available resources. The cost-push pressure is straining markets worldwide. The inflation rate in the euro area is at its highest level for 10 years. This is very worrying, and stagflation also seems to be around the corner.
Moreover, the financial crisis has complicated the European Central Bank’s task enormously. The ECB has to fight inflation tenaciously, and anchoring inflation expectations is key in this regard. But the risks are high. It is not clear how long the exogenous cost-push will last. It is critical that a wage price spiral be averted. As we used to talk about inflation moderation in the past decade, so we should strive to achieve moderation of price and wage dynamics in the period to come.
More economic divergence in the euro area, which would not foster a good climate for the European Central Bank’s moves. In addition, when markets are increasingly global, what the European Central Bank does has to be examined in relation to what other major counterparts do. Here it is about interest-rate differentials and overall policy stances.
A final note. The grave systemic risks financial markets carry nowadays demand better supervision frameworks, better coordination among the ECB, the Fed and other major central banks. The dangers of too-easy-money policies are to be underlined in this regard."@en1
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