© Reuters. FILE PHOTO: The European Central Bank (ECB) logo in Frankfurt, Germany, January 23, 2020. REUTERS/Ralph Orlowski
BERLIN (Reuters) – The European Central Bank must quickly raise interest rates in line with the United States, given high inflation in the euro zone, the head of Germany’s Ifo institute told the Augsburger Allgemeine newspaper.
“The U.S. interest rate hike leads to an appreciation of the U.S. dollar against the euro, which increases inflationary pressure in Europe,” Ifo head Clemens Fuest said, according to an advance copy of the newspaper, published on Friday. “In this respect, there is some pressure for the ECB to follow.”
While in the United States, economic policy affects inflation more than in Europe, where energy prices play a greater role, “that does not change the fact that the ECB also has to act,” said Fuest.
ECB must quickly raise key rates, says head of Germany’s Ifo institute