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The European Central Bank estimated on Tuesday that the economy in the euro zone will be relieved within “a few weeks” of the impact of the Omicron variant.
The headquarters of the European Central Bank, in Frankfurt (Germany).
REUTERS
The impact of the Omicron variant should only last “a few weeks” before allowing the recovery in the euro zone to continue, while inflation should recede, said Tuesday a senior official of the European Central Bank (ECB). “In the short term”, the Omicron variant “presents certain risks (…) but I think it is increasingly clear that it is an impact of a few weeks”, said Philip Lane, chief economist of the ECB, in an interview with the Lithuanian weekly “Verslo Zinios”.
2022, “year of recovery”
There is “less concern about Omicron than we had in December,” he adds. Although cases of contamination have continued to skyrocket since the start of the year, progress in vaccination has enabled EU countries to leave large parts of their economies open. 2022 is expected to be “another strong year of recovery” after the rapid recovery in 2021.
Same diagnosis in the USA
These comments echo those of US Treasury Secretary Janet Yellen, who said in mid-January that the Omicron variant would weigh on US economic growth in the months to come, but without derailing it. The US Federal Reserve (Fed) is preparing to raise its key rates to fight against soaring prices, and will decide at its meeting on Tuesday and Wednesday the pace and extent of the movement.
Inflation should ease
No similar announcement is expected when the ECB convenes its Governing Council on Thursday 3 February. Inflation in the euro zone in 2021 ended at an annual rate of 5% in December, unheard of since the start of the euro 20 years ago. However, “we have a clear vision” on the fact that “the rate of inflation will drop later this year”, assures Mr. Lane. It should return to around 3.2% in 2022, then below 2% (the objective pursued by the ECB) in 2023 and 2024, according to the institution’s latest forecasts.
ECB ready to react
“If we saw data coming in that suggested inflation might be too high relative to 2%, we would of course react,” Lane said. In such a scenario, the institute would first end its net purchases of debt on the market before examining “the criteria for increasing interest rates”, currently at their all-time low, explains- he. For now, the recovery cycle is more advanced in the United States than in Europe, which is why “we have every reason not to react as quickly as we can imagine from the Fed said ECB President Christine Lagarde recently.
(AFP)