Artus – What inflation in the euro zone in 2024?

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CHRONIC. The ECB might well to agree to deviate from its target set at 2%, with the argument of exceptional circumstances.

By Patrick Artus

Christine Lagarde, President of the European Central Bank, at the ECB headquarters in Frankfurt am Main (Germany), February 2, 2023.
© Arne Dedert/DPA Picture-Alliance via AFP

Published on 02/11/2023 at 09:00

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L’anticipation of the inflation rate in the euro zone – and underlying inflation, excluding energy and food – in 2024 should normally play an important role in the decisions of the European Central Bank (ECB) monetary policy choices .

The ECB anticipates annual average inflation of 6.3% in 2023 and 3.4% in 2024, following 8.4% in 2022; core inflation of 4.2% in 2023 and 2.8% in 2024, following 3.9% in 2022. This means that expected inflation and core inflation would approach 2% at late 2024 or early 2025.

If this scenario materializes, this might allow the ECB to conduct a very modestly restrictive monetary policy, with an intervention rate (a repo rate on the euro) between 4 and 4.5%. Such a policy…