The head of the ECB predicted an increase in inflation in the world by 5% due to the confrontation between the US and China

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The geopolitical confrontation between the US and China could accelerate world inflation by 5% and become a threat to the leading positions of the dollar and the euro. This opinion was expressed by the head of the European Central Bank (ECB) Christine Lagarde on Monday at a seminar at the American non-governmental Council on Foreign Relations.

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“If global supply chains are disrupted for geopolitical reasons, global consumer price increases could range from 5% in the short term to 1% in the long term,” Lagarde was quoted as saying by the Financial Times. As an example, the head of the ECB cited such important sectors as the production of electric cars, where the United States is completely dependent on the supply of 14 critical materials from Europe, as well as 98% on the supply of rare earth metals from China.

Lagarde drew attention to anecdotal evidence of an increase in the share of the yuan and the rupee in international trade, as well as a growing interest in gold as an alternative reserve asset. “While the data does not show significant changes in the use of key currencies. But they suggest that the status of key currencies can no longer be taken for granted,” – added the head of the ECB.

At the same time, Lagarde opined that a long period of “relative stability may now give way to prolonged instability, which will lead to lower growth rates, higher costs, and more precarious trading partnerships.”

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