The delta variant of the coronavirus and supply bottlenecks are casting a shadow over the near-term growth prospects for the global economy, European Central Bank (ECB) President Christine Lagarde said Thursday.
"Inflation has increased markedly since the beginning of this year and we expect it to rise further this autumn," she said at a meeting of the International Monetary and Financial Committee.
Lagarde said the ECB continues to view high inflation as temporary, mostly driven by the strong recovery in oil prices from their steep decline in the spring of 2020 during the early months of the pandemic.
"The impact of these factors should fade out of annual rates of price changes in the course of next year, dampening annual inflation," she said.
Lagarde noted that inflation could become weaker than expected if a renewed tightening of pandemic-related restrictions were to affect economic activity.
She warned, however, that price pressures could become more persistent if supply bottlenecks last or wages rise more than anticipated.
The ECB head noted the pace of economic recovery remains uneven across sectors and countries./aa