ECB Raises Expectations for Economic Growth and Inflation

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The economic recovery in the eurozone is going faster than expected. The European Central Bank (ECB) has, therefore, significantly increased its growth forecast for 2021.

 

The inflation forecast has also been revised upwards, but the sharp rise in the price level is probably temporary. In 2022 and 2023, inflation will decrease again.

For this year, the ECB now assumes 4.6 percent growth for the euro countries. In the previous estimate, this was still 4 percent. Inflation is likely to pick up to 1.9 percent this year, from 1.5 percent previously assumed by the ECB. The central bank expects inflation to fall to 1.5 and 1.4 percent, respectively, in the next two years.

On Thursday, the ECB decided to keep interest rates unchanged at historically low levels, as expected. The central bank also did not change the bond-buying program, with which the bank tries to support the economy during the corona crisis.

Investors and economists were curious about whether the ECB would release anything about phasing out its support programs. But the institution reiterated in a statement that the particular emergency bond purchase program would continue until the end of March next year, and at least until the corona crisis is over.

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