ECB Economic Bulletin: Inflation is projected to remain too high for too long

In an Economic Bulletin article published on Thursday; the European Central Bank (ECB) offered updates on the economic, financial and monetary developments in the Euro area.

Key highlights

“Inflation is projected to remain too high for too long.”

“The new ECB staff macroeconomic projections were finalized in early March before the recent emergence of financial market tensions.”

“ECB staff now see inflation averaging 5.3% in 2023, 2.9% in 2024 and 2.1% in 2025.”

“Wage pressures have strengthened on the back of robust labor markets and employees aiming to recoup some of the purchasing power lost owing to high inflation. 

“Risks to the outlook for economic growth are tilted to the downside. Persistently elevated financial market tensions could tighten broader credit conditions more strongly than expected and dampen confidence.”

“Baseline projections for growth in 2023 have been revised up to an average of 1.0% as a result of both the decline in energy prices and the economy’s greater resilience to the challenging international environment.”

“According to ECB staff March 2023 projections, the euro area fiscal outlook is set to improve over the projection horizon. “

Market reaction

EUR/USD is holding the higher ground near 1.0870 following the release of the ECB’s Economic Bulletin. The pair is adding 0.23% on the day to trade at 1.0866, as of writing.