Report
Patrick Artus

Is the scenario of 2% inflation in the euro zone at end-2022 in jeopardy?

Before the war in Ukraine, t he most likely scenario was that inflation in the euro zone would be slightly below 2% at the end of 2022 and in 2023. This would allow the ECB to exit its expansionary monetary policy only very slowly. The question now is whether the conflict in Ukraine will be long enough for inflation to remain permanently (until the end of the year) higher on the back of higher prices for all commodities. If that is the case, then wage earners in the euro zone will certainly not be happy in 2023 with the 2.5% wage increase they received in 2022, and core inflation in the euro zone will rise sharply in 2023. This would force the ECB to react, beyond the period of high caution brought about by the war in Ukraine.
Provider
Natixis
Natixis

Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.

 

Analysts
Patrick Artus

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