The European Central Bank (ECB) researchers said Wednesday in a report, the European economy is unlikely to witness a stagflation scenario similar to the one seen in the 1970s.

Key takeaways

While growth forecasts were cut and price expectations raised following Russia’s invasion of Ukraine, economic activity is still seen increasing next year and inflation is expected to slow below 2% in the second half of 2023.”

“Current expert forecasts remain far from a stagflation scenario.”

“However, uncertainty has increased,” leading to a greater range of estimated outcomes.

“Some differences between the current situation and the 1970s “make it less likely that stagflation will develop now.” 

Related reads

• EUR/USD Forecast: Euro defines consolidation range ahead of Powell
• ECB’s de Guindos: Fragmentation is a significant worry for the central bank