Dan O’Brien: As inflation rises across Europe, Germany and the ECB are watching Italy with interest

Christine Lagarde, president of the European Central Bank, says its official position is that recent price increases are transitory. But if inflation does take off, the ECB will be in a nightmare scenario

28th November, 2021
Dan O’Brien: As inflation rises across Europe, Germany and the ECB are watching Italy with interest
Christine Lagarde, president of the European Central Bank, takes the official position that the recent increase in prices is transitory, owing largely to higher energy prices and supply chain disruptions. Picture: Getty

When will interest rates rise? When will the European Central Bank (ECB) stop bankrolling governments? How will European finance ministers reform the rules governing their spending, budget deficits and public debt levels?

These profound questions have loomed large for some time. Developments over the past week have brought answers to them closer and a little bit clearer.

In Germany, Europe’s most powerful country both politically and economically, a new government was announced last week. Despite...

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