Joachim Nagel, European Central Bank (ECB) Governing Council member and Bundesbank president, expressed confidence that inflation will stabilize in 2024, with the ECB now targeting 2025 for achieving its 2% goal. This outlook is bolstered by falling energy prices, which could accelerate the inflation slowdown.
Previously, the ECB expected inflation to reach 2% by early 2026, but declining energy costs may move that timeline forward. However, Nagel cautioned that trade uncertainties pose significant risks, particularly for Germany’s export-heavy economy. He warned that rising tariffs—especially from U.S. trade policies under Donald Trump—could increase the likelihood of a recession in Europe.
Nagel also urged European leaders to seize the moment for greater infrastructure and military investments, advocating for expansion rather than retreat.
Meanwhile, ECB policymaker Martins Kazaks noted that global market uncertainties complicate forecasts for future interest rates. He highlighted the ongoing risk of a trade conflict and its potential impact on inflation expectations.
Recent Eurostat data showed that inflation in February stood at 2.4%, slightly higher than expected. While core inflation fell to 2.6%, energy price increases slowed considerably, signaling a move toward stabilization. However, inflation trends remain uneven across the Eurozone. While France saw a sharp decline to 0.9%, Germany experienced little change, underscoring the ECB’s continued challenges in steering the economy toward long-term price stability.
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