FRANKFURT – The European Central Bank raised its inflation projections on Thursday but cut its 2022 growth outlook as the COVID-19 pandemic and supply chain disruptions slow the euro zone’s economic recovery.
The ECB now sees inflation above its 2% target this year and in 2022 but holding below it in the following two years, in line with its previous guidance for the current inflation “hump” to be longer than expected but still largely transitory.
Inflation is now seen at 1.8% in 2024, the end of the bank’s projection horizon, indicating that policy tightening is still far into the future as the bank has undershot its inflation target for the past decade.
Inflation is seen averaging 3.2% next year, well above the 1.7% projected in September, while in 2023 it is seen at 1.8% against an earlier projection for 1.5%.
The growth outlook for next year was trimmed while projections were raised for this year and 2023. Risks to growth remain “broadly balanced”, ECB President Christine Lagarde said.
The following are the ECB‘s quarterly growth and inflation projections through 2024. Figures in brackets are previous forecasts from September. Thursday was the first time the ECB provided projections for 2024.
The ECB targets inflation at 2%.
2021 2022 2023 2024
GDP growth 5.1% (5.0%) 4.2% (4.6%) 2.9 (2.1%) 1.6%
Inflation 2.6% (2.2%) 3.2% (1.7%) 1.8 (1.5%) 1.8%