Inflation in the Euro zone to run higher throughout 2022 compared to expectations a month ago, according to economists polled by Reuters. This could put pressure on European Central Bank to tighten monetary policy.
In the near-term with a wide range of forecasts on economic growth in the Jan 11-18 poll and the median forecast for the current quarter chopped to 0.5% from 0.7%.
Reuters poll shows inflation forecast has risen for the 17 consecutive surgery — up by 0.6 percentage points each for the first and second quarters to 4.1% and 3.7% respectively which is well above the ECB’s 2.0% target.
“In the short term, we see some downside on growth stemming from virus containment measures,” said Bas van Geffen, senior macro strategist at Rabobank, referring to the current quarter, as reported by Reuters.
“In the longer term, we mainly expect slower growth as supply-driven inflation erodes households’ real spending power, which weighs on consumption and euro zone GDP. Omicron or other strains could further aggravate this negative impact of cost-push inflation,” he said.
