ECB Economic Bulletin: Inflation remains far too high, will stay above target for an extended period

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In an Economic Bulletin article published on Thursday; the European Central Bank (ECB) offered updates on the economic, financial and monetary developments in the Euro area.

The Governing Council will base the future policy rate path on the evolving outlook for inflation and the economy, following its meeting-by-meeting approach.

Inflation remains far too high and will stay above the target for an extended period.

The Governing Council also decided to change the terms and conditions of the third series of targeted longer-term refinancing operations (TLTRO III).

Economic activity in the euro area is likely to have slowed significantly in the third quarter of 2022, and the Governing Council expects a further weakening in the remainder of 2022 and the beginning of 2023.

Worsening terms of trade, as the prices paid for imports rise faster than those received for exports, are weighing on incomes in the euro area.

To limit the risk of fuelling inflation, fiscal support measures to shield the economy from the impact of high energy prices should be temporary and targeted at the most vulnerable.

The incoming data confirm that risks to the economic growth outlook are clearly on the downside, especially in the near term.

EUR/USD is unfazed by the release of the ECB’s Economic Bulletin. The pair is shedding 0.21% on the day, currently trading at 0.9988.

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