In the hearing of the Committee on Economic and Monetary Affairs of the European Parliament, ECB President Christine Lagarde said, ” it is evident that the economic recovery in the euro area is increasingly advanced”. Policymakers expected “continued strong growth” in H2, “enabling euro area output to exceed its pre-pandemic level by the end of the year”. GDP growth is forecast to reach 5.0% in 2021, then 4.6% in 2022, and 2.21% in 2023. Risks to growth are “broadly balanced”.
Eurozone inflation, at 3% in August, is expected to “rise further this autumn”. But Lagarde reiterated, “we continue to view this upswing as largely temporary”. ECB’s projections foresee annual inflation at 2.2% in 2021, 1.7% in 2022, and 1.5% in 2023. There are factors that could lead to stronger price pressures than expected, inflation shortages of materials and equipment, and higher than anticipated wage demands. She said, “but we are seeing limited signs of this risk so far, which means that our baseline scenario continues to foresee inflation remaining below our target over the medium term.
