MNI BRIEF: Bank Of Italy Revises Down Inflation Outlook

Italian average inflation will fall to 1.9% in 2024, below the European Central Bank’s 2% target, the Bank of Italy wrote in its macroeconomic projections on Friday.

The 2024 inflation forecast was 0.5 percentage point less than foreseen in October by the Bank, which expects inflation at 1.8% in 2025 and 1.7% in 2026. This year’s inflation should be 6%.

The downward revisions, which follow a similar announcement by the Portuguese central bank, reflect the “swifter decline in energy prices and the more pronounced slowdown in the core component,” the Bank said, noting that risks are balanced for inflation. (See MNI SOURCES: ECB Needs Sub-3% Core Inflation To Consider Cuts)

Risks though are tilted to the downside for growth in the event of a “more marked worsening in financing conditions, partly in connection with the higher riskiness of borrowers.

The national central bank kept its growth projection for 2023 at 0.7% but revised 2024 down two tenths to 0.6%.