Rapid wage growth in the euro zone could keep inflation elevated longer and the European Central Bank should hold interest rates at or near record highs through next year to extinguish price pressures, the International Monetary Fund said on Wednesday.
The ECB broke a streak of ten straight rate hikes last month, fuelling market expectations that its next move will be a cut, possibly as soon as April, with a total of 90 basis points of reductions priced in by the close of next year.
Inflation soared to over 10% a year ago but has been on a steady downward path since, even if the “last mile” of disinflation is seen the toughest and could still take two years to get from around 3% to 2%.
Conflict in Gaza had pushed up global energy costs, which creates further upside risk for prices. However, overall economic growth in the current quarter is somewhat weaker than projected, which could limit price pressures.
Բաժանորդագրվեք մեր ալիքին Telegram-ում
