Eurozone inflation to slow but 'considerable uncertainty': Lagarde

THE high rate of inflation in the eurozone ought to come down over the coming months, European Central Bank President Christine Lagarde said on Friday (Apr 14), but 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 eurozone rose by 6.9 per cent on an annual basis in the eurozone, down from 8.5 per cent in February.

The figure was the lowest rate recorded in a year, and much below the peak of 10.6 per cent 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 per cent in 2023, still well above its two-per cent target.

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Inflation is then expected to fall to 2.9 per cent in 2024 and 2.1 percent in 2025. AFP