The green transition will keep inflation high for not a short time.
This was stated by the German economist Isabel Schnabel, a member of the board of the European Central Bank as head of market operations, in her speech at the annual meeting of the American Finance Association.
Hand in hand with the recovery of the European economy after the Covid-19 emergency, energy prices have skyrocketed, with higher bills for citizens and businesses and with an increase in inflation of up to 5% for the Eurozone ( 3.9% in Italy ).
Despite this, the ECB has decided not to raise interest rates until 2023.
"Monetary policy cannot afford to stand by and watch energy prices rise if they pose a risk to price stability in the medium term," warned the expert.
"While in the past energy prices have often gone up and down fast, now the need to fight climate change could mean that fossil energy costs may not only remain high but could also rise, if we are to achieve the goals of the agreements. of Paris ", said Schnabel again.
This phenomenon, he added, poses "challenges to both fiscal and monetary policy. Governments will need to protect the most vulnerable parts of society from rising energy prices in a way that does not delay the green transition."
The German economist then pointed out that the transition phase can lead to a prolonged period of higher energy inflation: "Higher carbon prices work in part by stimulating investment and innovation in low-carbon technologies. But these investments take time. At the moment, renewable energy has not yet proved to be sufficiently modulable to meet rapidly increasing demand. "
