ECB’s Makhlouf: Risks to the Inflation Forecast Are Judged to Be on the Upside

24 January 2022

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Gabriel Makhlouf on Monday said that inflation risks were on the upside.

In a speech made to Ireland’s Institute of Directors, Makhlouf, who heads the Central Bank of Ireland, said that euro area growth would ‘pick up strongly again this year, before slowing towards more historical average rates in 2023 and 2024.’

Predicting inflation was very difficult, as ‘[t]here are many things we know, like where price pressures are emanating from’, he said.

‘Having reached highs of 5% in December, inflation across the euro area is expected to remain elevated in the near term’, he said. ‘We expect it to remain above 2% for most of this year but our forecasts project it to settle below our 2% target in 2023 and 2024.’

‘While the rate of inflation is expected to decline, in Ireland it will remain above pre-pandemic levels and risks to the inflation forecast are judged to be on the upside’, he said.

The domestic economic story was ‘very positive’, according to Makhlouf. ‘We are in good shape. The economy is proving very resilient to the pandemic. Each successive wave of the virus is having a reduced economic impact, and we expect this trajectory to continue. Recent restrictions have also caused some disruption but they have not dampened or derailed the overall momentum of the economy.’