The war in Ukraine is a threat to inflation, said ECB President Christine Lagarde during a press conference after the meeting of the Governing Council.
The ECB has announced that it is possible that exit the quantitative easing program in the third quarter of 2022, surprising the markets, which spoke of a standstill due to the war in Ukraine.
The President of the ECB stressed that the central bank will do whatever it takes to ensure price stability.
“The war in Ukraine will have a significant impact on growth and inflation through the disruption of international trade, weaker confidence and higher energy prices. The result depends on how the conflict develops, “he stressed.
Christine Lagarde noted: “Recognizing the environment of high uncertainty, the council considered a range of scenarios in today’s meeting. “The economic recovery is underway, supported by the weakening of the Omicron mutation, supply bottlenecks have been reduced and the labor market has further improved.”
However, Christine Lagarde stressed that GDP has been revised downwards in the near future. He noted, however, that the ECB expects inflation to stabilize at 2%. “In all scenarios, inflation is expected to fall to 2%,” he said.
“We want to have a lot of options to maneuver accordingly, based on current data,” Christine Lagarde said in response to a reporter’s question.
The President of the ECB acknowledged that there will be further pressure on food prices, and that rising energy costs will reduce demand. At the same time, he believes that the risks to the economic prospects have increased due to the war.
Review for inflation and growth
The ECB upgraded inflation forecasts in the Eurozone in 2022 to 5.1% from 3.2% in December. For 2023 inflation is estimated at 2.1% from 1.8% and for 2024 at 1.9% from 1.8%.
“Inflationary risks can be long-term,” warned Christine Lagarde.
The ECB today carried out a manual review of its growth and inflation forecasts in the euro area.
For average inflation in 2022 revised to 5.1% from 3.2% forecast in December, while for development revises the estimate to 3.7% from 5.1%.
For 2024 the growth is expected at 1.6%, an estimate unchanged compared to December.
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