European Central Bank's (ECB) Governing Council member Gabriel Makhlouf stated on Tuesday the ECB's policymakers need to be conscious of the effects of the tightening when the recovery from the coronavirus pandemic remains highly uncertain, and incomplete. "The wrong monetary policy action today could prove more costly than the risks stemming from the current spike in inflation," the official stressed.
He also noted that it should be recognized that there are risks to the inflation outlook. If the current trends in inflation persist, he added, the case for the policy action becomes stronger. "Incoming data do not currently show evidence that would lead us to think that inflation pressures are becoming persistent, but this could evolve and we must remain vigilant and cognisant of the risks," he stated.
In the wake of the remarkable levels of uncertainty, Makhlouf continued, we should also maintain optionality in our policy tools and not locking ourselves into commitments that put our price stability objective at risk.