ECB President says Eurozone economy to stay weak in near term
(MENAFN) European Central bank (ECB) President Christine Lagarde stated on Thursday that the eurozone Economy is expected to remain weak in the near term, following a period of stagnation in the fourth quarter of 2024. She attributed this sluggishness to fragile consumer confidence in the European Union, noting that households have not yet been encouraged enough by rising real incomes to significantly boost their spending. This cautious outlook highlights the ongoing challenges facing the region's economy as it works to recover.
Lagarde also discussed the ECB’s decision to lower the deposit facility rate by 25 basis points, explaining that it was made after an updated assessment of inflation trends, underlying inflation dynamics, and the transmission effects of monetary policy. She emphasized that the disinflation process is progressing well, with inflation continuing to align broadly with the bank's projections. The ECB expects inflation to reach its medium-term target of 2 percent by the end of the year.
Despite these optimistic inflation projections, Lagarde acknowledged that domestic inflation remains high, largely due to the slow adjustment of wages and prices in certain sectors following the previous surge in inflation. These sector-specific delays in price and wage adjustments continue to exert pressure on overall inflation levels, even as broader inflation trends move closer to target.
According to Eurostat, the eurozone’s GDP unexpectedly remained stable in the fourth quarter of 2024, marking a period of economic stagnation as the region faces mixed economic signals.
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