ECB: Higher inflation to last longer than expected

The central bank projected a return of inflation to the target of 2% over the medium term

Inflation will continue to rise further this year as higher inflationary levels are projected to last longer than originally expected, the European Central Bank (ECB) stated on Thursday in its latest economic bulletin, Qazet.az reports citing Teletrader.

The central bank contributed this upswing to the sharp rise in energy prices across the continent and the recovering demand following the reopening of the economy. Additionally, base effects related to the end of the VAT cut in Germany are also seen as a factor.

However, the ECB noted that these factors will ease over the course of 2022, adding that as the economy gets back to full capacity a wage hike is expected as well. Lastly, the central bank projected a return of inflation to the target of 2% over the medium term.