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The European Commission is forecasting eurozone inflation to be below the European Central Bank's 2% target by the end of 2023, according to the latest round of economic forecasts out of Brussels. Despite upping their outlook for end-2023 from the Autumn projection, the EC is forecasting inflation at just 1.7%, up from the 1.4% seen in November.
"Inflation in the euro area is projected to peak in the first quarter of 2022 and remain above 3% until the third quarter of the year," the report notes, before adding that "as the pressures from supply constraints and energy prices fade, inflation is expected to decline markedly" in Q4, before settling "below 2% next year."
The report notes inflation projections are subject to upside risks if cost pressures are passed on from producer to consumer prices to a larger extent, increasing the likelihood of strong second-round effects, with risks "aggravated by geopolitical tensions in Eastern Europe".
Source: European Commission --- cut off date for new information was Feb 1
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.