Tough decisions may need to be taken to combat the "inflation monster", Central Bank governor Edward Scicluna has said. Speaking at the launch of the Central Bank’s 2022 annual report on Thursday, Scicluna warned that “inflation is likely to remain too high for too long”. “If interest rates need to rise, we will raise them, even if it comes at the cost of the Central Bank’s finances. Our mandate is to fight inflation, not generate profits,” he said. Nonetheless, Scicluna highlighted that Malta’s inflation rate remains lower than that of the euro area, which peaked at 10.6% during 2022, significantly higher than its declared target of 2%. NSO data shows that Malta's inflation rate rose to 7% in February. Scicluna warned that Central Banks need to remain flexible in their decision-making “even if these decisions are interpreted as u-turns” because factors causing unpredictability in the global economy, such as the Ukraine war, remain present. This comes in the wake of a series of interest hikes carried out by the European Central Bank throughout 2022 which have placed local banks under increasing pressure to raise their own interest rates, with potentially problematic...
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