Shifts in economic realities risk fuelling inflation: Lagarde

JACKSON HOLE, Wyoming (Reuters) – Shifts in how the global economy operates, from the labour markets to energy transition, risk creating inflation volatility which could in turn translate into more persistent price pressures, European Central Bank President Christine Lagarde said.

“Whether all these various shifts will prove to be permanent is not clear at this stage,” Lagarde told the U.S. Federal Reserve’s Jackson Hole Economic Symposium on Friday. “But it is already evident that, in many cases, their effects have been more persistent than we initially expected.”

The changes, which also include economic protectionism, risk creating greater volatility in price setting which could then “creep” into medium-term inflation through wages repeatedly ‘chasing’ prices, Lagarde argued.

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