The economic outlook for the Eurozone is bleak due to the ongoing war in Ukraine and inflation, which is expected to “remain undesirably high for some time,” European Central Bank President Christine Lagarde said on Thursday.
Inflation in the Eurozone increased to 8.6% in June, Ms. Lagarde said in a statement after the ECB’s policy meeting on Thursday. She noted that “surging energy prices were again the most important component of overall inflation.”
Food inflation also rose further, standing at 8.9 per cent in June,” she added. “We expect inflation to remain undesirably high for some time, owing to continued pressures from energy and food prices and pipeline pressures in the pricing chain.”
The effects of the armed conflict in Ukraine, with inflation at record highs and much uncertainty in the economy, are leading to gloomy prospects for the second half of 2022 and beyond, the ECB president said after the ECB decided to raise interest rates for the first time since 2011 in an attempt to curb rising prices.