ECB Sees Inflation Near 1% Next Year, Guindos Says

The European Central Bank sees inflation remaining negative for the rest of this year before rising to around 1% in 2021, according to Vice President Luis de Guindos.

“All in all, we expect inflation to be close to 1% in 2021 and to see it moving up towards 1.2% or 1.3% in 2022,” he said in an interview with Finnish newspaper Helsingin Sanomat. In September, the ECB predicted average price growth of 1% in 2021, and 1.3% in 2022.

The euro-area economy has been hit by new coronavirus lockdowns in recent weeks, and will likely contract in the fourth quarter. Officials next set policy on Dec. 10 and are widely expected to increase and extend their 1.35 trillion-euro ($1.6 trillion) pandemic asset-purchase program as well as offer more long-term funding to banks.

“These are the two main tools if the situation gets darker,” Guindos said in the interview, which was conducted on Nov. 24 and published Saturday. “The arrival of the vaccines brings hope regarding the medium-term outlook.”

The ECB is also due to update its quarterly macroeconomic projections on Dec. 10, which will include a first estimate for growth and inflation in 2023.

©2020 Bloomberg L.P.

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