Eurozone inflation soared to new record high in January

Eurozone inflation soared to new record high in January

BRUSSELS: Inflation in the eurozone soared to a new record high in January, official data showed yesterday, adding pressure on the European Central Bank ahead of a monetary policy meeting this week. The figure hit 5.1 percent last month, a first since the official Eurostat agency started to compile the data in 1997. The European Central Bank, in charge of euro monetary policy, has a medium-term inflation target of two percent. Its board meets today and observers expect the ECB to stick to its current rates, which are historically low in the wake of the coronavirus pandemic, despite the inflationary pressure.

Any tightening could threaten economic recovery, and weigh down indebted companies and governments. “January’s inflation data support our view that the ECB will soon forecast inflation to be at its target over the medium term,” the firm Capital Economics said in response to the latest data.

“Accordingly, we think that policymakers will end net asset purchases completely this year and prepare to start raising interest rates in early 2023, if not sooner,” it said. ECB chief Christine Lagarde has insisted inflationary pressure is “transitory” and should ease over the course of the year. She says the sudden bounceback of economies from