(Finance) – The president of the European Central Bank, Christine Lagardesaid the European Central Bank will not reach its target of bringing inflation back to 2% before the end of 2025. “Our latest projections show that pressures inflationary expected to moderate and that inflation will reach our target by the end of 2025. It is expected to decline from 5.6% in 2023 to 3.2% in 2024 and 2.1% in 2025,” he explained in his speech at a hearing at the Committee on Economic and Monetary Affairs of the European Parliament.
“Overall inflation continued to decline from its peak in October last year, reaching 5.2% in August, down from 5.3% in July,” Lagarde underlined.energy inflation it recovered in August from its downward path, but remained negative at -3.3%. Food price inflation has fallen since peak Of Marchbut it is still high, standing at almost 10% in August”. “Inflation net of goods energy and food fell from 5.5% in July to 5.3% in August,” he added.
Lagarde, however, explained that “at the same time, the pressures internal on prices remain strong. Services inflation is still supported by strong spending on vacation And trips and from the high growth salary. The contribution of labor costs to annual domestic inflation increased in the second quarter, partly due to lower productivity. In contrast, earnings contribution declined for the first time since the start of 2022.”
The ECB president pledged that Frankfurt remains determined to ensure that inflation returns to its medium-term target of 2% in a timely manner. “Inflation continues to decline, but is expected to remain too high for too long. To strengthen progress towards our goal, we decided earlier this month to increase our interest rates of reference 25 basis points“, has explained.
“Based on ours last evaluation – he added –, we believe that ours official rates have reached levels which, if maintained for a sufficiently long period, will make a substantial contribution to the timely return of inflation to our target. In any case, ours decisions future will ensure that the ECB’s key interest rates. will be set at sufficiently restrictive levels for as long as necessary.”
Lagarde explained to MEPs that theeuro area activities remained essentially stagnant in the first half of 2023 and recent indicators point to further weakness in third quarter. “The minor request Of exports of the euro area and the impact of the rigid conditions financial they are holding back the growtheven through minors investments residential and corporate. Even the services sector, which until recently had been resilient, is now weakening,” the ECB President reported.
“So far the job market has remained resilient despite the economic slowdown, with the unemployment rate remaining at a record low of 6.4% in July – he added –. But while employment grew 0.2% in the second quarter, the creation of jobs in the sector of services is moderating and the overall momentum is slowing down.” “Looking to the future – declared Lagarde –, the economic momentum is expected to resume with the increase in consumer spending consumers and gods incomes real, supported by falling inflation, rising wages and a strong job market. Our latest headcount projections call for growth of 0.7% in 2023, 1.0% in 2024 and 1.5% in 2025.