In a speech this week, European Central Bank President Christine Lagarde laid out three tests the bank will consider when it comes to interest rate cuts, including corporate profit margin compression. Groundwork Collaborative Chief Economist Dr. Rakeen Mabud reacted with the following statement:
“The ECB’s approach to monetary policy, which acknowledges that inflation can come down without inflicting harm on millions of workers when it’s being driven by the pricing power of big corporations, stands in stark contrast to Chair Powell’s tactic of keeping interest rates at a 23-year high.
“The European Central Bank is exactly right to consider excessive profit-taking by big corporations when making monetary policy decisions.”
Email press@groundworkcollaborative.org to speak with one of Groundwork’s experts about the role of corporate profits in inflation.