According to French politician Christine Lagarde, who currently serves as the president of the European Central Bank (ECB), Europe’s hot inflation may be due to climate change. In her interview with Madame Figaro, Lagarde urged people to take into account that “climate risks” can have a significant impact on price stability.
ECB board member Isabelle Schnabel says inflation has made it difficult for central banks to manage inflation – Christine Lagarde says climate change needs to be taken into account
Last June, euro area inflation was 8.6 percent and the following month in July, European inflation rose to 8.9 percent. As Federal Reserve Chairman Jerome Powell pledged to tackle inflation on Friday, ACB executive board member Isabelle Schnabel and Banque de France governor Francois Villeroy de Galhau told the newspaper that major “sacrifices” would be needed to stem rising European inflation.
“Central banks are likely to face higher levels of sacrifice compared to the 1980s,” Schnabel said on Friday. “The rise in global inflation makes it difficult for central banks to control inflation, even as prices respond more strongly to changes in domestic economic conditions,” the ECB executive board member added.
Meanwhile, according to a recent Madame Figaro interview with ECB President Christine Lagarde, the central bank’s leadership believes that European inflation could be caused by climate change.
Largarde is not the only person who has linked inflation to global warming and climate change. On August 15, The New York Times published an editorial on how specific policies can fight inflation while simultaneously fighting climate change. The recently enacted Inflationary Reduction Act, which aims to reduce inflation by fighting climate change, is being followed by the Biden administration.
Largard strongly believes that climate change has undermined price stability, and notes that further climate disasters could harm the global economy. “If climate disasters, droughts and famines occur more frequently around the world, there will be consequences for prices, insurance premiums and the financial sector,” Largaard insisted in an interview with Madame Figaro (English translation here). The head of ECBB further added:
We have to consider that.
Europe is grappling with rising energy costs linked to the Ukraine-Russia war, but several media outlets insist that “high temperatures in the US, Europe and China are slowing economies around the world and fueling inflation.” Analysts also predict that Europeans could face an extremely harsh winter as the seasons change. During the Largarde interview published on August 25, the ACB president was asked if she was carrying “the weight of responsibility” when it came to Europe’s gloomy economy.
“Yes, absolutely,” Largarde said in an interview with French media. “I still buy my groceries at the supermarket, pay my own bills, including my gas bills, and meet people at the market, because life here at the ECB can be a little removed, interrupted, and characterized by economic models and forecasts. I move forward dutifully and humbly.”
What does ECB President Christine Lagarde think climate change is responsible for Europe’s inflation? Let us know what you think about this in the comments section below.
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