Saturday

3rd Dec 2022

Duisenberg admits euro increased prices

One year on from the introduction of the euro, the European Central Bank (ECB) President Wim Duisenberg admits for the first time that the physical introduction of the euro has led to an increase in inflation.

Mr Duisenberg’s statement in an interview to the Dutch television channel RTL-Z and in the Belgian newspaper 'de Financieel-Economische Tijd’, contradicts previous ECB’s statements and that of EU Finance Ministers – that the euro introduction left no impact on inflation.

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In November, the prices in the eurozone have increased by 0,1% on a monthly base and 2,2% on an annual base. Although the ECB President did not say how much the prices increased in real terms, the Belgian Central Bank had estimated that in Belgium, the euro introduction led to an increase in consumer prices of 0,1%.

Even Commission President Romano Prodi said that the euro led to an unjustifiable increase in prices, saying that in Italy, the euro effect contributed to an increase of 0,5% in prices.

"We had to be more honest," said Mr Duisenberg, stating at the same time that "we had to show the ability to explain that the effect on prices would have been limited anyhow."

Duisenberg also admitted that the euro is one of the reasons the eurozone inflation remains above the 2 per cent target.

Duisenberg could continue longer than expected

Wim Duisenberg could stay in his position as the head of the European Central Bank a bit longer than expected. Speaking to the Bild am Sonntag newspaper, he said that if needed he could continue in order to smooth problems with finding his successor.

ECB says more rate hikes to come

European Central Bank president Christine Lagarde said more rate hikes will come, but also admitted a recession will not lower inflation — leaving some economist question the logic of the policy.

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