“Although the prospects for him inflation “It is uncertain, it is likely to remain high for longer than originally expected, but it will decline this year.” This was stated by the President of the European Central Bank Christine Lagarde, speaking today to the European Parliament’s Committee on Economic and Monetary Affairs in Brussels.
Lagarde said inflation in the eurozone had risen sharply in recent months to 5.1% in January from 5% in December and was likely to remain high in the near future. Energy prices, which are dragging down prices in many sectors, are the main reason for rising inflation, Lagarde said.
Nevertheless, the financing conditions of the economy remained favorable and interest rates on bank loans to businesses and households continue to be at historically low levels, he added.
“Compared to our expectations in December, the risks to the inflation outlook are upward, especially in the short term,” Lagarde added, noting that in March her forecasts ΕΚΤ will provide more information taking into account the latest data.
“In assessing the outlook for inflation, we need to keep in mind that demand conditions in the euro area do not show the same signs of overheating as in other major economies,” Lagarde said. That said, this increases the likelihood that current price pressures will subside, allowing the eurozone to return to the 2% target in the medium term. He added that according to initial estimates, inflation will return to 2% by 2023 and will remain close to this level thereafter.
Ms. Lagarde also said that due to the current uncertainty, the ECB needs more than ever to maintain monetary policy flexibility.
Finally, Lagarde referred to the “moderate dynamics” of growth in the euro area (0.3% in the fourth quarter of 2021), saying that it is mainly due to the rapid spread of the Omicron variant, as the measures have limited consumer service activities ( travel, tourism, hospitality, entertainment). The current pandemic wave and related constraints are likely to continue to have a negative impact on growth earlier this year and high energy costs are expected to reduce economic activity in the short term, however the economic impact of the current pandemic wave appears to be less damaging. on economic activity, in relation to previous waves, said Ms. Lagarde.
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