The ECB Has More Rate Hikes in Store, But They Won't Be as Large as Last Week's, Official Says
Scicluna cautioned that central banks are limited in what it can do to fight supply-side inflation — the kind that Europe is facing.
"The source of [our] inflation is not demand as in the U.S., it's supply… and therefore, the instruments of any central bank are very limited."Raising interest rates to control inflation spurred by demand is not a solution, as higher prices are in this case driven by supply chain shocks,He added that supply is"very difficult" to manage, across various industries and businesses, who face many challenges"turning the taps back on.
"We're sort of advising that the help the governments are now being pushed into giving at least has to be targeted for the vulnerable households," he said, adding that they"can't afford to cushion everybody all the time."to help with skyrocketing energy costs. It was announced that a typical household will pay no more than £2,500 per year for each of the next two years.
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