There's need to prioritize inflation fight over growth: global central bank chiefs
ECB President Christine Lagarde says the low inflation of the pre-pandemic era would not return

Bringing down high inflation around the world will be painful and could even crash growth but must be done quickly to prevent rapid price growth from becoming entrenched, the world's top central bank chiefs said on Wednesday.
Inflation is breaking multi-decade highs around the world as soaring energy prices, post-pandemic supply chain bottlenecks and in some cases red-hot labour markets are pushing up the cost of everything, and threatening to set off a hard-to-break wage-price spiral.
"The process is highly likely to involve some pain but the worst pain would be from failing to address this high inflation and allowing it to become persistent," U.S. Federal Reserve Chair Jerome Powell said at the European Central Bank's annual conference in Sintra, Portugal.
Echoing Powell's words, ECB President Christine Lagarde said the low inflation of the pre-pandemic era would not return and that the ECB, which has persistently underestimated price growth, had to act now because price growth was likely to remain above the 2% target for years to come.
RISKS
Engineering policy tightening to avoid a recession in the United States is certainly possible, Powell said, adding that the pathway was narrow and there were no guarantees of success.
"Is there a risk that we would go too far? Certainly there's a risk, but I wouldn’t agree that it's the biggest risk to the economy," he said. "The bigger mistake to make, let's put it that way, would be to fail to restore price stability."
Augustin Carstens, the General Manager at the Bank for International Settlements, an umbrella group of central banks, said policymakers had taken the first step in recognising they had a problem. Now their job was to tighten policy, as risks were mounting.
"They should try to... prevent the full transition from a low inflation environment to a high inflation environment where this high inflation gets entrenched," Carstens told the ECB gathering. "You need to prevent this vicious cycle from kicking in."
The ECB has already flagged rate hikes in both July and September while the Fed increased rates by 0.75 percentage points in June and may opt for a similar move in July.
The Bank of England raised rates by 25 basis points to 1.25% this month - its fifth successive move -and said it would act "more forcefully" in the future if it saw a greater persistence of inflation.
"There will be circumstances in which we will have to do more," BoE Governor Andrew Bailey told the conference. "We're not there yet in terms of the next meeting. We're still a month away, but that's on the table."
"But you shouldn't assume it's the only thing on the table," he said, referring to another 25 basis point hike.
However, Bailey also warned that the British economy was now clearly at a turning point and starting to slow.
SOURCE: REUTERS

Security meeting scheduled amid rising terror threats in Pakistan
- 4 hours ago
Five family members of SHO injured in grenade attack in Khuzdar
- an hour ago

Houthis launch twin attacks on USS Harry Truman
- 3 hours ago

TTP camps destroyed in Khyber Pakhtunkhwa during police operation
- 4 hours ago
SpaceX aims to send robots to Mars by 2026, humans expected by 2029-2031
- 4 hours ago
Weekend US tornadoes leave at least 40 dead
- 3 hours ago

Gold glitters, historic high in Pakistan
- 4 hours ago

UConn-Creighton ends in scuffle over 'fancy' dunk
- 4 hours ago

Trump’s attacks on higher ed could provide a chance to reimagine the university
- 5 hours ago

PSX continues rally as KSE-100 gains 663 points amid IMF optimism
- 4 hours ago

FM reveals no plans for salary boost or pension increase in new budget
- 5 hours ago
Wolf attack in Central Kurram leaves 9 injured, including child
- 4 hours ago