“We continue to see inflation moderate next year, but it will take longer than initially anticipated” and “we continue to expect it to remain below our new symmetric target of 2% over the medium term.” This was stated by the President of the European Central Bank, Christine Lagarde, speaking at a hearing before the Economic Affairs Committee of the European Parliament.
“Shorts of raw materials, equipment and manpower are burdening industrial production, dampening the outlook in the short term. Although the duration of supply constraints is uncertain, they are likely to last for several months and only fade gradually through 2022.”
“Current futures prices point to a significant drop in energy prices in the first half of 2022,” says Lagarde.
“In terms of official interest rates, we have made clear in our forward-looking guide the three conditions that must be met before rates start to rise. Despite the current jump in inflation, the medium-term outlook remains weak and therefore highly unlikely. These three conditions will be fulfilled next year.”
“Even after the pandemic emergency ends, it will remain important that monetary policy, including appropriate calibration of bond purchases, support recovery across the eurozone and a sustainable return of inflation to our 2% target.” So said the president of the European Central Bank at a hearing in the European Parliament, recalling that Frankfurt will announce in December its intentions on the future of the government bond purchase program. “The challenge is far from over, and decisions by policy makers will continue to determine the strength of the recovery,” he added.
“The rapid implementation of the next generation of the EU should help reduce the gap further” in the different recovery times between eurozone countries. “It is correct to say that some countries will return to the pre-pandemic level sooner than others, and some will have to wait a few more months and quarters, and this is related to the severity of the crisis, the approved containment measures and differences in the economic structure,” Lagarde explained, noting that “ The trend of recovery is better” than expected.
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