The ECB’s inflation forecasts face both downside and upside risks

FILE PHOTO: The European Central Bank (ECB) headquarters in Frankfurt, Germany, March 12, 2016. REUTERS / Kai Pfaffenbach

MILAN, Dec 30 (Reuters) -European Central Bank forecasts that inflation in the euro area will fall below 2% in 2023 and 2024 are exposed to downside risks and not just upside, it said in a interview published Thursday Ignazio Visco, member of the ECB’s governing council.

The ECB this month raised its inflation forecasts above its 2% target for this year and in 2022, and predicted that inflation will fall below that figure in the next two years.

However, during its December monetary policy meeting, several bank officials questioned the ECB’s estimates, arguing that it is underestimating the risk that price growth will remain above the 2% target.

“Forecasts (for inflation) below 2% in 2023-24 are, of course, subject to both downside and upside risks,” Visco, who is also governor of the Bank of Italy, told the Italian newspaper La Stampa. .

Visco said that at the moment the final impact on the eurozone economy that the omicron variant of the coronavirus, which is spreading through Europe, may have is unknown.

Regarding the Stability Pact of the European Union, Visco said that the sustainability of public budgets is crucial both in the bloc as a whole and in each member state, adding that it would be useful to have an Economy Minister from the euro zone or of the EU.

(Reporting by Sara Rossi; editing by Gianluca Semeraro; editing by John Stonestreet and Susan Fenton; translation by Flora Gómez)

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