ECB 2023/24 inflation forecasts subject to downside not just upside risks -Visco

Interview with ECB's policymaker Visco in Rome
FILE PHOTO: European Central Bank Governing Council member Ignazio Visco looks on during an interview with Reuters, in Rome, Italy, May 31, 2021. REUTERS/Guglielmo Mangiapane

December 30, 2021

MILAN (Reuters) – The European Central Bank’s forecasts that inflation in the euro zone will be below 2% in 2023 and 2024 are exposed to downside not just upside risks, ECB Governing Council member Ignazio Visco said in an interview published on Thursday.

The ECB this month raised its inflation projections to above its 2% target for this year and in 2022 and forecast inflation would be below that figure in the following two years.

However, during the bank’s December policy meeting several policymakers questioned the ECB’s projections, arguing that the bank is underestimating the risk of price growth holding above the 2% target.

“The (inflation) forecasts below 2% in 2023-24 are of course subject to both downside and upside risks,” Visco, who is also the governor of the Bank of Italy, told the Italian daily La Stampa.

Visco said that the final impact on the euro zone economy of the coronavirus variant Omicron, which has raced out of control in Europe, was unknown at the moment.

Regarding the European Union Stability Pact, Visco said sustainability of fiscal budgets was crucial both in the bloc as a whole and in each member state, adding it would be helpful to have a euro zone or EU economy minister.

(Reporting by Sara Rossi, editing by Gianluca Semeraro; editing by John Stonestreet and Susan Fenton)