Monetary policy: ECB officials warn of uncertainty in inflation forecasts

The ranks of the European Central Bank (ECB) are again issuing warnings of prolonged high inflation.

The ECB forecast that the inflation rate will fall below 2 percent again in 2023 could be a bit too rosy, said the Dutch central bank chief Klaas Knot in an interview published on Thursday by the newspaper “Trouw”.

"I have a different opinion, I think the chance that we will stay above 2 percent is just as great." Not far above 2 percent, but still above, "said the ECB Council representative.

His Italian colleague Ignazio Visco also referred to uncertainties in inflation forecasts. However, the expectation that inflation in the euro zone will again be below the ECB target of 2 percent in 2023 and 2024 is fraught with not only upside but also downside risks, he told the Italian newspaper “La Stampa”. The economic effects of the new Omikron coronavirus variant are still unclear.

Among other things, the German ECB director Isabel Schnabel and the Spanish ECB deputy chief Luis de Guindos had recently referred to uncertainties in inflation forecasts.

The ECB recently raised its inflation forecast for the coming year to an average of 3.2 percent, almost doubling it.

However, it should weaken over the course of the year.

For the year ending, an average inflation rate of 2.6 is expected.

In 2023, the inflation rate is expected to fall to 1.8 and remain at this level in 2024.