Reported 9 months ago
Two researchers, Giorgio Primiceri and Domenico Giannone, will present a paper at the European Central Bank's annual meeting suggesting that the ECB can continue slowly cutting interest rates as they face an 'easy last kilometre' in their fight against inflation. The researchers predict that inflation will ease to the ECB's 2% target next year and remain there through 2026, even with a policy rate cut to 2.5% from the current 3.75%. They also argue that a stronger-than-expected demand recovery post-COVID, rather than supply constraints, contributed to high inflation in 2021-22, and tightening policy sooner would have resulted in a peak inflation of only 6% but at the cost of decreased economic output.
Source: YAHOO