Euro zone not facing stagflation risk: ECB’s de Guindos

FILE PHOTO: EU finance and economy ministers hold informal meeting in Berlin
FILE PHOTO: Vice-President of the European Central Bank (ECB) Luis de Guindos gives a statement during the second day of the Informal Meeting of EU Ministers for Economics and Financial Affairs in Berlin, Germany September 12, 2020. Odd Andersen/Pool via REUTERS

March 22, 2022

FRANKFURT (Reuters) – Russia’s war in Ukraine will dent euro zone growth but the block is still set to expand, even if the conflict escalates, European Central Bank Vice President Luis de Guindos said on Tuesday.

“So, we can so far dismiss the possibility of stagflation because even in the weakest scenario we are looking at growth of around 2% in 2022,” he told a conference, referring to a phenomenon of high inflation coupled with stagnating growth.

He added that while high energy prices are pushing inflation to record highs, there is no indication yet that inflation expectations are starting to move higher or becoming “deanchored”.

(Reporting by Balazs Koranyi; Editing by Andrew Heavens)