Falling eurozone inflation could be slower, officials say

A inflation on euro area It may fall more slowly than expected earlier, in part due to persistent supply bottlenecks, but the European Central Bank (ECB) is unlikely to overreact by removing the stimulus too quickly, two bank officials said on Friday. .

Inflation was above 4% last month, more than twice the 2% target of the ECB, due to rising energy prices and bottlenecks in the industry’s supply chain, which are being bigger problems than imagined just a few weeks ago.

Finnish central bank chief Olli Rehn and Lithuania’s Gediminas Simkus suggested these inflationary pressures could last longer, but maintained the ECB’s view that the price hike is temporary, rejecting suggestions to tighten monetary policy.

“Inflation in the eurozone is still mostly transitory, although some of its components are more persistent than previously expected,” Rehn told a conference.

You bottlenecks in supply chains they are one of the factors proving more durable, and Rehn argued that the 19-nation bloc is unlikely to experience much relief until the end of 2022, which will also affect rising consumer prices.

Simkus also acknowledged that inflation is high, but projected a fall, albeit slower than predicted by the ECB.

“Even if we have a certain increase or even higher inflation rate…it will come back below the target in 2023,” he said.

The ECB projected in September that inflation will fall below 2% again in 2022, but a number of experts from both the private sector and the European Commission have already recognized that price increases will not fall below the ECB’s target for another year. later.