Summers and Krugman see no alternative to ECB tightening
Despite lack of overheating, huge energy shock requires action to anchor inflation expectations
The European Central Bank (ECB) does not have an alternative to current sharp policy tightening, say leading US economists Larry Summers and Paul Krugman.
Although the eurozone’s labour market is not as tight as in the US and demand is not the main driver of high inflation in Europe, the enormous energy shock the region is facing due to its dependence on Russian gas requires a swift monetary adjustment, Summers and Krugman said.
On September 13, in remarks at the ECB’s annual research
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