September 29, 2022

Lagarde admitted slowdown in economic growth in the eurozone

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A further disruption in the supply of goods could further slow down economic growth in the eurozone. This was announced on June 9 during a press conference by the President of the European Central Bank (ECB), Christine Lagarde.

“The situation in Ukraine and the new quarantine restrictions in China have exacerbated the problem of supply chains. As a result, companies are facing higher costs and their outlook for the future has deteriorated,” the financier said.

She stressed that the main threat remains a further disruption of energy supplies to the eurozone.

In addition, she noted that the ECB postponed the increase in interest rates on Thursday, but confirmed plans to increase next month. In July, the cost of borrowing will be increased by 25 basis points in July – this is the first rate increase since 2011

The ECB has “significantly” raised its eurozone annual inflation forecast to 6.8% this year and said it will remain just above its 2% target in 2024. Growth forecasts have also been lowered. The GDP of the 19 euro-using countries is projected to grow by 2.8% in 2022 and just 2.1% next year.
During a press conference broadcast on the regulator’s website, the ECB’s Governing Council is discussing the possibility of raising the key rate. Lagarde warned about this measure in the spring.

Earlier on Thursday it became known about the plans of the ECB to raise key interest rates in September against the backdrop of rising inflation. At the same time, the regulator intends to raise key interest rates by 25 basis points during a meeting in July on monetary policy.

In May, inflation in the euro area set a historical high, reaching 8.1% (in annual terms). Such data was published by the European statistical office Eurostat. The main catalyst for inflation in Europe was the rise in energy prices, and the gradual launch of an embargo on Russian oil is still ahead.

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