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The coronavirus pandemic shock continues to pose ongoing risks to the projected path of inflation

The near-term economic situation continues to be dominated by high uncertainty.

Volatility of inflation during 2020-2021 can be largely attributed to the nature of the pandemic shock.

No basis for a sustained shift in inflation dynamics.

GDP likely to have contracted again in the first quarter of this year.

Further extension of lockdown measures will leave an imprint on activity in the second quarter.

US stimulus impact via trade and financial linkages on euro area annual inflation will be about 8 basis points in 2023, although any excessive pressure on long-term nominal yields would diminish.


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