The euro is weaker against the pound and the dollar this morning, mainly due to dollar strength.
The European Commission has reduced its growth forecast for 2022 to 4.0%, down from the November prediction of 4.3%. This is largely due to soaring energy prices and inflation weighing on growth.
The commission also raised its forecast for inflation to 3.5%, far higher than the November forecast of 2.2% and the European Central Bank’s target of 2.0%. Nonetheless, it still expects inflation to decline in 2023 to 1.7%.
Despite increasing expectations of an interest hike from the Central Bank, ECB official, Philip Lane, yesterday suggested that a hike was not necessary, saying “bottlenecks will eventually be resolved, price pressures should abate and inflation return to its trend without a need for a significant adjustment in monetary policy”.
