ECB’s Lagarde: No rate hike likely in 2022
ECB President Lagarde announced that a rate hike in 2022 is highly unlikely.
Christine Lagarde, President of the European Central Bank (ECB), stated that there are upside risks to the inflation outlook and that rate hikes in 2022 are unlikely.
Lagarde, who made statements after the ECB’s interest rate decision, stated that the Euro Zone economy has recovered and said, “Inflation will remain high in the short term. Energy prices have increased significantly. Supply shortage and energy are among the short-term risks. Demand has outstripped supply in some sectors. Recovery is driven by domestic demand. The recovery and savings in the employment market will support consumption,” he said.
ECB President Lagarde noted that supply shortages and energy prices pose a risk to growth and inflation.
Lagarde stated that the impact of Omicron on the economy has not been evaluated yet.
Increase in inflation expectations
Lagarde also announced the ECB’s forecasts for economic indicators.
Accordingly, the 2021 Eurozone growth expectation was increased from 5 percent to 5.1 percent. The 2022 growth expectation was reduced from 4.6 percent to 4.2 percent. The 2023 growth expectation was increased from 2.1 percent to 2.9 percent. The growth forecast for 2024 is set at 1.8 percent.
The ECB’s inflation forecast for 2021 was increased from 2.2 percent to 2.6 percent. The 2022 inflation expectation was increased from 1.7 percent to 3.2 percent, and the 2023 expectation was increased from 1.5 percent to 1.8 percent. The inflation expectation for 2024 is set at 1.8 percent.
