The eurozone will return to pre-crisis levels in the first quarter of next year

Economic activity in the eurozone will return to pre-crisis levels in the first quarter of next year, said the head of the European Central Bank (ECB) Christine Lagard after the meeting of the Governing Council. She added that she still has a long way to go before she overcomes the damage caused by the pandemic. On Thursday, the ECB's Governing Council reaffirmed the strong monetary stimulus stance as expected, keeping interest rates at record lows and not changing the parameters of the emergency pandemic asset purchase program. Lagard pointed out that the number of employees in the eurozone is still 3.3 million lower than before the corona crisis. This mainly affected young people and low-skilled workers. Inflation in the euro area accelerated to 1.9% in June, and the ECB expects consumer price inflation to continue to rise in the coming months before slowing again in 2022. "The current increase in inflation is driven mainly by higher energy prices and the effects of a low base for comparison caused by the sharp fall in oil prices at the beginning of the pandemic and the consequences of a temporary reduction in VAT in Germany last year," Lagard said. "As the economy recovers, supported by our monetary measures, we expect inflation to rise in the medium term, but remain below our target. Although indicators of longer-term inflation expectations have risen, they remain below our target of 2%." According to the head of the ECB, the eurozone economy is recovering significantly. However, its prospects continue to depend on the development of the pandemic and vaccination. According to her, the current increase in inflation is largely temporary. The ECB's monetary policy, including the revised direction of expectations, should support the economy in recovery, as well as inflation, to reach the 2% target.