Market: Lagarde (ECB) reaffirms expecting a decline in inflation


FRANKFURT (Reuters) – The economic situation in the euro zone and the absence of a sharp rise in wages support expectations of an ebb in inflation this year, Christine Lagarde, President of the European Central Bank (ECB) said on Friday.

In an online debate organized by the World Economic Forum, she explained that energy prices are expected to stabilize in the coming months and that bottlenecks in supply chains, another driver of the rise in prices, could also be absorbed.

Inflation in the euro zone reached 5% year on year in December, more than twice the target set by the ECB, but the latter expects it to return to around 2% by the end of the month. ‘year.

In the United States, the rise in consumer prices is even stronger, at 7% over one year, the highest level since 1982, which should lead the Federal Reserve to raise its rates no later than March according to most forecasts. observers.

But Christine Lagarde considered it unlikely that the euro zone would experience a comparable situation, stressing the absence of signs of sustained wage increases and tensions in the job market.

“When you look at the job market, you don’t see anything like the ‘big quit’ and our employment participation numbers are approaching their pre-pandemic levels,” she said.

The phrase “big quit” refers to the wave of quits that disrupted the U.S. job market at the end of 2021, a move tied to the post-pandemic recovery and which helped boost wages.

“These two things alone, if studied carefully, clearly indicate that we are not moving at the same speed and that we are unlikely to experience an increase in inflation similar to that at which the market American was confronted,” added Christine Lagarde.

(Report Balazs Koranyi, French version Marc Angrand)

Copyright © 2022 Thomson Reuters



Source link -84