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6/21, 4:49 PM (Source: TeleTrader)
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Inflation growth to be offset by energy prices drop - Lagarde

President of the European Central Bank, Christine Lagarde, gave a speech on Monday, sharing that the upward effect of the underlying inflation pressures on headline inflation will be roughly counterbalanced by the expected decline in energy prices. The Bank forecasts European inflation of 1.9% in 2021, 1.5% in 2022 and 1.4% in 2023.

Lagarde pointed out that the rising inflation in the United States is affecting the euro area "through the direct channel of imported goods" and through "several indirect trade or expectation mechanisms". Stronger consumer demand in the US sparked foreign demand for euro area goods and services, causing inflation growth.

Overall, the head of ECB said that the outlook for the economy is "indeed brightening", but mutations of the COVID-19 virus pose a high risk, therefore the Bank decided to keep PEPP measures. "Such a tightening would be premature and would pose a risk to the ongoing economic recovery and the outlook for inflation," Lagarde added.

Breaking the News / LH