European Central Bank President Christine Lagarde has eased concerns about the future of the local economy. While many experts continue to raise worries about looming recessions, the head of the ECB believes that the euro area will be able to avoid such a scenario. Even if a recession happens, it will not be deep. According to Lagarde, the regulator is ready to raise interest rates at a faster pace with a view to preventing surging inflation if necessary.
“We have markedly revised down our forecasts for growth in the next two years. But we are still expecting positive growth rates due to the domestic buffers against the loss of growth momentum,” Lagarde said, commenting on the challenges the European economy has faced. A deterioration in the growth rate, an energy crisis, and acute food insecurity are of special note.
According to forecasts, inflation in the euro area will reach 6.8% by the end of the year, well above the ECB’s target of 2%. At the July meeting, the regulator will most likely lift its headline interest rate for the first time in several years. Experts have been waiting for this step in recent months, criticizing the ECB for indecision.
