The IFO institute said on Wednesday slashed the 2022 GDP growth projections for the German economy while sharply revising up its inflation forecast.

Key quotes

“Cuts its 2022 forecast for German growth to 2.5%, from 3.1% previously predicted in March, while revising its inflation forecast to 6.8%, up from an earlier 5.1%.”

“Raises 2023 economic growth forecast to 3.7% from 3.3%.”

"At the beginning of the year, high prices led to a loss of purchasing power among private households and in turn to a decline in goods consumption."

“Commodity prices and supply bottlenecks are expected to gradually ease in the second half of the year.”

Market reaction

EUR/USD consolidates the latest leg up below 1.0500, awaiting the ECB’s emergency meeting, due at 0900 GMT, for the next move. The pair is up 0.63% so far.