ECB President Mentioning 'Taylor Swift': "Inflation Is Bumpy"

"It's not just Taylor Swift. As you know." Christine Lagarde, President of the European Central Bank (ECB), which leads the monetary policy of the Eurozone (20 countries using the euro), mentioned the global pop star Taylor Swift while responding to concerns about inflation.

Christine Lagarde, President of the European Central Bank (ECB) (right), is taking questions during the annual ECB Forum held in Sintra, Portugal, on the 2nd (local time). [Image source: CNBC broadcast capture]

According to the economic media CNBC, President Lagarde attended the annual ECB forum held in Sintra, Portugal, on the 2nd (local time). When asked whether Swift's 'The Eras Tour' tends to fuel inflation in the service sector, she briefly laughed and replied, "It's not just Swift. Others have come too." She acknowledged that Swift's recent European tour has impacted the entrenchment of service inflation in the Eurozone but pointed out that the effect is not due to a single star.

The economic influence of Swift, who gave rise to neologisms such as 'Swiftflation' and 'Swiftnomics,' was even mentioned in the Beige Book, the Federal Reserve's economic report, last year. Sarah Eisen of CNBC, who posed the question that day, also said to Fed Chair Jerome Powell sitting next to Lagarde, "Am I right? Chair Powell? We confirmed this overall last year."

Swiftflation, a portmanteau of 'Swift' and 'inflation,' refers to the significant economic impact and inflation observed wherever Swift holds tour concerts, attracting tourists and others. Earlier, the Canadian major securities firm TD Securities also forecasted that the Bank of England (BOE) might delay interest rate cuts ahead of Swift's scheduled UK concerts in August.

President Lagarde said, "I have said that inflation is on a bumpy path. I expect the disinflation process to be challenging until the end of 2024," adding, "The observation that service inflation is not moving is also correct." She referred to the service sector's inflation rate of 4.1% in the Eurozone inflation data released that day, saying, "We are paying very close attention. The real issue is understanding whether this is a permanent trend or a lag effect related to monetary policy."

The Eurozone's consumer price index (CPI) inflation rate for June, released that day, rose 2.5% year-on-year, slightly slowing from the previous month (2.6%). However, the core CPI inflation rate, which shows the underlying trend of prices, remained steady at 2.9%, the same level as the previous month. This also exceeded market expectations (2.8%). Accordingly, market speculation is gaining traction that the ECB will take a cautious stance on interest rate decisions for the time being.

Earlier, at the opening speech of the first day of the annual forum held in Sintra, President Lagarde also expressed caution about inflation. She said, "We are still facing various uncertainties regarding future inflation," adding, "It will take time to collect enough data to confirm that the risk of inflation above the target has passed." These remarks were interpreted as indicating an interest rate freeze at the ECB's monetary policy meeting scheduled for the 18th.

The ECB took a policy shift by cutting all major policy rates by 0.25 percentage points in June, earlier than the Fed. However, this year, both the Eurozone inflation and economic growth forecasts were revised upward, leading to assessments of a 'hawkish cut.'