“The situation will get worse before it starts to get better,” Lagarde said in an appearance at the European Parliament, where she confirmed that prices will remain above 2% in 2024 powered by energy and food.
growth and inflation
The latest ECB projections point to annual inflation closing 2022 at 8.1% and falling to 5.5% next year and 2.3% in 2024. However, the ECB president pointed out that the risks for this outlook are on the upside and reflect “above all the possibility of major disturbances in energy supplies“Although these risk factors are the same for growth, their effect would be the opposite: they would increase inflation, but reduce growth,” said the former French minister.
The ECB expects a “substantial” slowdown in growth in the eurozone in the coming quarters due to inflation, the loss of momentum from the reopening of the economy, the weakness of global demand “also in the context of a tougher monetary policy in many large economies”, as well as the “high uncertainty “. The institution expects GDP growth of 3.1% in 2022, but only 0.9% in 2023, to later rise to 1.9% in 2024.
Given this scenario, the president assured that it will be necessary to continue raising interest rates to try to balance the economic situation. The objective is “cool demand“and avoid the risk of a persistent rise in inflation expectations, said Lagarde, who later assured that their decisions will depend on the data they receive and the evolution of the inflation outlook.
Lagarde called for fiscal austerity measures
Lagarde called on governments to support its monetary policy with fiscal measuresbut has insisted that these must be “temporary” and “specifically designed to help those who are in need” and not general aid that can increase inflation. “The measures that are broad and generalized without distinction between the beneficiaries (…) can produce a rise in prices that would work against the monetary policy that we developed”he warned.
Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
