Chairman and Chief Editor
Bedour Ibrahim

Staff projections for inflation in 2024 were updated to an average 2.3%

European Central Bank hints at June rate cut as it trims inflation forecast

Thursday 07/March/2024 - 08:07 PM
أصول مصر

The European Central Bank on Thursday lowered its annual inflation forecast، as its confirmed a widely expected hold of interest rates.

ECB President Christine Lagarde، meanwhile، suggested market pricing for a June rate cut was coming into line with policymakers’ outlook.

Staff projections for inflation in 2024 were updated to an average 2.3% from 2.7%. Looking ahead، staff see inflation hitting the ECB’s 2% target in 2025 and cooling further to 1.9% in 2026.

Updating forecasts for economic growth

They meanwhile updated their forecast for economic growth for 2024 to 0.6% from 0.8%، as the euro zone’s economic activity escapes its current stagnation. They then project gross domestic product expansion of 1.5% in 2025 and 1.6% in 2026، slightly weaker than the December outlook.

“We are in the disinflationary process and we are making progress،” Lagarde said during a press conference on Thursday.

“We are more confident as a result، but we are not sufficiently confident، and we need more evidence، more data، and we know this data will come in the next few months. We will know a little more in April and a lot more in June.”

Policymakers have repeatedly signaled May as a key date، since wage settlements are set to be released that month.

The ECB will be “laser-focused” on two areas of inflation that could surprise، namely wage growth and profit margins، Lagarde said. There could also be a downside surprise to the outlook if monetary policy dampens demand more than expected or the global economic environment worsens unexpectedly، she added.