Euro zone: inflation should stabilize around 2% in the medium term, according to the ECB

Posted 31 March, 2022

At the same time, Eurostat announces an unemployment rate down 0.1 points to 6.8% in February, its lowest level ever.

The European Central Bank estimates that inflation in the eurozone should stabilize at around 2% in the medium term, said Thursday in Paris its chief economist Philip Lane, while the rise in consumer prices is accelerating in the EU.

“The Governing Council thinks it is increasingly likely that inflation will stabilize around our 2% medium-term target,” Mr. Lane told a lecture at the Paris School of Economics.

He explained that in this context, the European Central Bank should be able to gradually normalize its monetary policy by reducing its debt purchases as it announced on March 10.

“The level of monetary policy stimulus put in place to respond to the pre-COVID-19 pandemic challenge of persistently below-target inflation can be gradually normalized,” Ms. Lane.

However, the context of the war in Ukraine could call this trajectory into question.

“We must be fully prepared to revise our monetary policy should the price shock and war between Russia and Ukraine result in a significant deterioration in the macroeconomic outlook, with the aim of reducing the medium-term inflation outlook. added Philip Lane.

Consumer price inflation reached 9.8% in Spain, 7.3% in Germany, 6.7% in Italy, and 5.1% in France in March (incomparable HICP data).

"We are ready to deploy a wide variety of instruments" to respond to the risk of fragmentation of the eurozone, said Mr. Lane, citing a recent speech by Governor Christine Lagarde.

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