ECB sees higher growth, inflation

By Thomson Reuters Jun 6, 2024 | 7:36 AM

FRANKFURT (Reuters) – The European Central Bank raised some of its economic growth and inflation projections on Thursday, predicting a somewhat later return of price growth to its 2% target.

Having tamed runaway inflation with a record string of rate hikes, the ECB cut interest rates for the first time since 2019 on Thursday, with further easing expected as the economy normalizes from a series of shocks related to the pandemic and Russia’s war in Ukraine.

Growth across the 20 countries that use the euro rebounded at the start of the year after more than a year of stagnation but will remain relatively weak this year, with only a modest acceleration likely in 2025.

Inflation is now seen at 2.2% next year, above its previous forecast for 2.0% and only coming to target in 2026, indicating that the “last mile” to its target might be tougher than once hoped.

The following are the ECB’s projections for inflation and economic growth. Previous projections from March are in brackets.

2024 2025 2026

GDP growth: 0.9% (0.6%) 1.4% (1.5%) 1.6% (1.6%)

Inflation: 2.5% (2.3%) 2.2% (2.0%) 1.9% (1.9%)

(Reporting by Balazs Koranyi; Editing by Catherine Evans and Alex Richardson)