ECB Council warns of downward growth risks

ECB Council warns of downward growth risks

The Governing Council of the European Central Bank (ECB) continued to identify downside risks to growth at its recent meeting, according to ECB President Christine Lagarde. According to forecasts published in March by the ECB's economic staff, gross domestic product (GDP) in the euro area is expected to increase at moderate rates until 2026. Lagarde stressed that despite weak economic performance in the first quarter, a recovery is expected, particularly through the services sector.

As expected, the ECB decided to leave key interest rates and asset purchase programs unchanged. However, a possible interest rate cut has been discussed if inflation gets closer to the target. Lagarde predicted that inflation will fluctuate around current levels in the coming months and then decline later. She also expects a gradual reduction in bottlenecks in the labor market.

The prevailing assessment of the Governing Council reflects a cautious stance, pointing to the uncertainties in the economic situation and the need for possible monetary easing. The ECB thus remains prepared for a changing economic situation and keeps an eye on measures such as potential interest rate cuts in order to be able to react appropriately to developments.