Lagarde (ECB) assures that inflation “is on the right track”, but reiterates that it will rebound at the end of the year

Published on October 29, 2024 MADRID Oct. 25 (EUROPA PRESS) – The president of the European Central Bank (ECB), Christine Lagarde, stated this Friday from Washington that inflation in the eurozone is “on track” to meet the objective 2% price stability. “The information received on inflation shows that the disinflation process is on the right track,” said the former French Minister of Economy. “Recent indicators of economic activity have surprised somewhat on the downside and financing conditions remain restrictive,” he added. In addition, Lagarde has reiterated that she foresees a “temporary” increase in prices during the fourth quarter of this year as the “drastic decreases” in last year's energy bill stop counting in the interannual rate. However, inflation should continue its decline later to reach 2% in 2025 and average 1.9% already in 2026. Growth should then gradually strengthen thanks to the increase in household disposable income and by the disappearance of the restrictive effects of the monetary policy already undertaken, which will support both consumption and investment. Exports will have a positive impact with the reactivation of external demand. The 'guardian of the euro' recalled that unemployment in the euro zone closed August at 6.4%, the lowest since the adoption of the common currency. “Labor productivity is expected to recover in the future when labor hoarding disappears and business margins moderate,” he indicated. Lagarde has encouraged fiscal and structural reforms that increase potential GDP growth and reduce inflationary pressures in the medium term. In this sense, it has echoed the reports drafted by Mario Draghi and Enrico Letta to increase European competitiveness and strengthen the Single Market, respectively.

Hritik Verma: