Euro-Zone Inflation Signals Lagarde’s Ongoing Challenge for 2025
Upcoming euro-zone inflation data highlights the ongoing challenges for ECB President Lagarde as she aims for a 2% target by 2025
Euro-Zone, Inflation, Christine Lagarde, ECB, Europe, Gas Prices
Brussels: So, the euro-zone is gearing up for some inflation data next week, and it’s looking like it might be a bit of a mixed bag. Economists are predicting that consumer prices could rise by about 2.4% in December compared to last year. That’s a slight bump from the previous month, which is definitely something to keep an eye on.
Now, the underlying numbers, which leave out the more volatile stuff like energy, are expected to hold steady at around 2.7%. But here’s the kicker: rising fuel costs are likely to keep things a bit tricky for the European Central Bank and its president, Christine Lagarde. She’s been pretty optimistic about hitting that 2% inflation target by 2025, but it’s clear there’s still a lot of work to do.
Lagarde recently shared her thoughts in a video, expressing hope that 2025 will be the year they finally hit that target. She mentioned that they’ve made good progress in 2024, but there are still hurdles to jump over. The ECB thinks they might reach that 2% mark by the end of this year, but with gas prices creeping back up, it’s not a sure thing.
And it’s not just gas prices that are a concern. There are also whispers about potential US trade tariffs that could throw a wrench in the works. It’s a bit of a balancing act for Lagarde and her team as they try to keep inflation in check while navigating these challenges.
On the flip side, some economists are feeling a bit more optimistic. They believe that the overall trend is moving towards disinflation, which could allow the ECB to cut rates this year. Jamie Rush, a chief economist, thinks we might see a 100 basis point cut coming up.
As for the euro-zone data, it’s set to drop on Tuesday, right alongside numbers from Italy. France and Germany will also be releasing their figures shortly before that. Economists are expecting to see some acceleration in those numbers, similar to what we saw from Spain at the end of December.
In the meantime, the Bank of Greece’s governor is predicting that the ECB will cut its deposit rate by 100 basis points by fall 2025. But not everyone is on the same page. The Austrian central bank governor thinks it might be wise to hold off on any cuts for now, especially with energy prices on the rise again.
So, it’s a bit of a waiting game for everyone involved. The next few months will be crucial in determining how things play out for inflation in the euro-zone.