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MNI BRIEF: Euro Economy Very Weak, Road to 2% 'Bumpy' - Nagel

(MNI) LONDON
(MNI) London

Too soon to say if hikes are over, as Bundesbank boss expresses hope that reaching price target won't require recession.

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Europe’s economy is experiencing a period of “pronounced weakness,” Bundesbank chief Joachim Nagel said in a speech Thursday, and the road to stable 2% inflation would be a “bumpy one with many ups and downs.” The pace of price increases is set to rise even if energy prices remain at their present level, he said, with the main effect on inflation of previous rate hikes expected to take hold in 2024.

Underlying inflation dynamics are still “quite strong” and the decline in overall inflation seen in recent weeks is unlikely to continue over the coming months, meaning it is not yet clear whether the hiking cycle is over.

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Europe’s economy is experiencing a period of “pronounced weakness,” Bundesbank chief Joachim Nagel said in a speech Thursday, and the road to stable 2% inflation would be a “bumpy one with many ups and downs.” The pace of price increases is set to rise even if energy prices remain at their present level, he said, with the main effect on inflation of previous rate hikes expected to take hold in 2024.

Underlying inflation dynamics are still “quite strong” and the decline in overall inflation seen in recent weeks is unlikely to continue over the coming months, meaning it is not yet clear whether the hiking cycle is over.

Keep reading...Show less