Technical Analysis

Headline inflation expected to fall to 2% target in 2H 2025 – ECB economic bulletin

  • The ECB releases its economic bulletin for December
Justin Low

Justin Low

Thursday, 12/01/2023 | 09:15 GMT-0

12/01/2023 | 09:15 GMT-0

  • Inflation is expected to decline from an average of 8.4% in 2022 to 6.3% in 2023
  • Inflation is then expected to decline to an average of 3.4% in 2024 and of 2.3% in 2025
  • Headline inflation is expected to fall to the ECB’s medium-term inflation target of 2% in the second half of 2025
  • But HICP inflation excluding energy and food will remain above 2% throughout the horizon
  • Risks to the economic growth outlook are on the downside, especially in the near-term
  • The risks to the inflation outlook are primarily on the upside
  • Tighter financing conditions would mitigate the build-up of financial vulnerabilities and lower tail risks to inflation over the medium-term
  • Interest rates will still have to rise significantly at a steady pace to reach levels that are sufficiently restrictive to ensure a timely return of inflation to the 2% medium-term target
  • Full release

There’s nothing new here as this is mostly a capsule of views held by the ECB and policymakers have put out such remarks over the course of the past few months already.

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