Euro zone inflation to slow but ‘considerable uncertainty’ – Lagarde
The high rate of inflation in the euro zone ought to come down over
the coming months, European Central Bank President Christine Lagarde
But she warned there was “considerable uncertainty” around the forecast.
“We expect euro area inflation to continue to fall,” Lagarde said in a
statement at the IMF’s spring meetings in Washington that was published
on the ECB’s website.
“This outlook remains surrounded by considerable uncertainty, with both upside and downside risks,” she added.
Higher than expected wage increases could keep the rate elevated,
while “financial market tensions” or fast-falling energy prices could
see it slow further, she said.
In March, consumer prices in the euro zone rose by 6.9% on an annual basis, down from 8.5% in February.
The figure was the lowest rate recorded in a year, and much below the peak of 10.6% recorded in October.
Sky-high inflation driven by sharp increases in the cost of energy
prompted the ECB to crank up interest rates at a record pace to try to
tame consumer price prices.
But recent turbulence in the banking sector has brought complications and strengthened calls to temper rate hikes.
In its most recent projections, the ECB forecast inflation to average 5.3% in 2023, still well above its 2% target.
Inflation is then expected to fall to 2.9% in 2024 and 2.1% in 2025.