Credit Suisse chairman warns 'temporary inflation' talk too upbeat
Reuters
Published Nov 18, 2021 16:24
Updated Nov 18, 2021 16:41
By Sergio Goncalves
LISBON (Reuters) - The talking down of speeding inflation as a temporary phenomenon by many central banks poses risks of a more intense monetary adjustment at a later date than would otherwise be needed, Credit Suisse (SIX:CSGN) Chairman Antonio Horta-Osorio said.
"Markets have been giving a lot of credit to central banks... but the latest indicators are that the temporary is perhaps less temporary," he told a banking conference in Lisbon, calling the central banks' discourse "somewhat courageous"
"The risk for central banks here is that if inflation proves not to be temporary, it could trigger a much more intense monetary adjustment than would otherwise be necessary," the Portuguese former Lloyds (LON:LLOY) Bank chief executive added.
Supply chain disruptions and a sharp increase in energy prices are now driving market inflation expectations, which Horta-Osorio said would be important in defining what happens to long-term interest rates and the yield curve.
If interest rates start rising aggressively before economies have managed to reduce their indebtedness, "it would be the biggest threat" to countries like Portugal, which had the third-largest public debt in the European Union: 135% of GDP in 2020.
At the same conference, European Central Bank Governing Council member and Bank of Portugal Governor Mario Centeno insisted that "inflation is still a temporary phenomenon" due to the speed of recovery and the bottlenecks of supply chains, with no secondary effects from the labour market on prices in Europe.
"Monetary policy must be aware of its capabilities, but it cannot resolve supply shocks. We must, at this moment, be patient," he said, advocating "a monetary policy that remains accommodative throughout this recovery phase" and a fiscal policy to support more vulnerable sectors.
Get The App
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.