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Stagflation 'not at all likely', says ECB

2022-06-22T08:30:19.048Z

A period of stagflation in the euro zone is “not at all likely” in the eyes of the private sector, the European Central Bank said on Tuesday, at the time...



A period of stagflation in the eurozone is “

not at all likely

” in the eyes of the private sector, the European Central Bank said on Tuesday, as the institute prepares to raise its rates in the face of high inflation.

Market participants and consumers "

now expect lower growth and higher inflation

" in the nineteen-country region, however "

current forecasts by experts (from various private groups) suggest that stagflation is not at all probable

”, according to an article published in the monthly bulletin of the monetary institute.

Read alsoWhat is "stagflation", this threat that hangs over France and the euro zone?

We speak of stagflation in the presence of a prolonged period of low growth and high inflation, which would last in this case until the end of 2023. The reopening of the economy in 2021 against the backdrop of the decline of the Covid-19 pandemic 19 was held back by supply chain disruptions, which kick-started inflation.

The war launched in February 2022 by Russia in Ukraine then exacerbated the phenomenon with the effects on energy prices, while increasing "

concerns about the outlook for economic activity

“, notes the article.

The ECB is currently counting on a price increase of 6.8% in 2022, then 3.5% in 2023, while it has reduced its growth forecasts for the period.

But economic commentators, whose opinions have been compiled by the ECB, believe that stagflation like that which followed the oil shock in the early 1970s is not in sight.

Read alsoFears of economic recession in Europe and the United States weigh down European stock markets

ECB President Christine Lagarde reaffirmed on Monday the institute's intention to carry out two interest rate hikes in July and September, the first in more than 10 years, in an attempt to stem price increases.

During a hearing before the European Parliament, the Frenchwoman denounced “

Russia's unjustified aggression against Ukraine

” which “

severely affects

” the economy in the euro zone and created “

great uncertainty.

But "

the conditions are in place for the economy to continue to grow and recover in the medium term

", she assured, thanks in particular to the "

targeted

" budgetary policies of the States and the funds provided for in the recovery plan. European recovery

NextGenerationEU

”, the European programs “

Fit for 55

” (to reduce polluting gases) and “

REPowerEU

” (for renewable energies).

Source: lefigaro

All business articles on 2022-06-22

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