The European Central Bank expects a slower recovery in inflation

The European Central Bank expects a slower recovery in inflation

The European Central Bank (ECB) expects a slower recovery in inflation. However, the growth outlook for the euro area economy has improved. The ECB expects consumer prices in the euro area to continue to decline until the end of the year and to recover more slowly in 2021 than previously expected. This is despite hopes that the arrival of the Covid-19 vaccine has improved growth prospects, Luis de Guindos, the bank's vice president, told the Finnish daily Helsingin Sanomat.

The ECB is likely to lower its inflation forecasts

The new economic forecasts will be presented by the ECB after the meeting of the Governing Council on 10 December, at which it will adopt further monetary stimulus, as signaled by ECB officials. According to de Guindos, the ECB seems to be reducing its inflation forecasts for this year and next and possibly for 2022. "Inflation will be negative by the end of this year and we expect it to return to positive territory next year," de Guindos said. "Overall, we expect inflation to be close to one percent in 2021 and to accelerate to 1.2 or 1.3 percent in 2021," he added.

The ECB expects the eurozone economy to decline

De Guindos also confirmed that the ECB expects the eurozone economy to decline in the current quarter. However, further growth prospects have improved due to hopes that vaccines against the new coronavirus will be available soon. "Negative quarter-on-quarter growth is now the most realistic scenario for the end of this year. But the medium-term outlook, mainly due to the beam of hope brought about by the vaccine reports, has been clarified," he added. In its September forecasts, the ECB projected inflation in the euro area of ​​0.3 percent this year, 1 percent in 2021 and 1.3 percent in 2022. According to the autumn forecast, gross domestic product (GDP) was expected to fall by 8 percent this year. increase by 5 percent in 2021 and by 3.2 percent in 2022.