ECB’s Kazimir flags risk of high euro zone inflation for longer

By Robert Muller

PRAGUE (Reuters) – Euro zone inflation could remain elevated for longer than expected, European Central Bank policymaker Peter Kazimir said on Tuesday, joining a growing chorus of warnings on building price pressures.

The ECB last week extended stimulus despite high inflation, arguing that price pressures will abate and inflation will languish below its 2% target from the fourth quarter of 2022.

Some policymakers pushed the central bank to acknowledge upside risks to inflation and several, including the central bank governors of Germany, Portugal and Lithuania, have already warned publicly about the inflation risk.

“What is true about Slovakia, is also true for the euro zone as a whole: there is a risk, and this risk is not small, that elevated inflation will stay with us for longer,” Kazimir, Slovakia’s central bank chief, told a news briefing.

He added that he is among those policymakers who see a risk that price growth will end up higher than predicted.

“The euro zone may be struggling with higher inflation levels for a longer time,” Kazimir said.

Euro zone inflation shot up to 4.9% last month, but the ECB sees it dropping back below target on its own as one-off price pressures ease.

Although inflation is mostly seen as temporary, several policymakers have warned that it could linger for long enough to influence wage setting, making price pressures more long-lasting.

(Reporting by Robert Muller; Writing by Balazs Koranyi; Editing by Jason Neely and Alexander Smith)

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