EU Inflation Still Seen as Temporary, Eurogroup’s Donohoe Says

(Bloomberg) --

Inflation pressure in Europe is still likely to be temporary, Eurogroup President Paschal Donohoe said Monday, even if it is taking longer than expected for it to slow.

“When we move into 2022, I do expect us to be on average back at around 2%,” Donohoe, who chairs meetings of the euro-area finance ministers and is also Ireland’s finance minister, said in a Bloomberg TV interview. “But it is clearly taking a little longer to get to that point.”

Donohoe’s comments echo those of European Central Bank President Christine Lagarde. She and her colleagues have insisted that soaring prices are fueled by temporary factors, such as energy costs, that will soon start to fade. In contrast, Federal Reserve Chair Jerome Powell enacted a hawkish pivot last week, suggesting the word “transitory” should no longer be used to describe what’s happening.

While the omicron variant of the coronavirus is “a concern,” Donohoe said he remains confident in the euro-area economies. Any decision on when to phase out the current supplemental spending aimed at boosting the economies “is completely contingent on where we are with the disease,” he said.

©2021 Bloomberg L.P.