The eurozone economy will remain weak in the near term after stagnating at the end of last year, European Central Bank (ECB) President Christine Lagarde said Thursday, citing fourth quarter GDP figures.
Lagarde said consumer confidence is fragile in the European Union, and households have not yet drawn sufficient encouragement from rising real incomes to significantly increase their spending.
Touching on the ECB’s rate cut decision Thursday by 25 basis points, she said the decision to lower the deposit facility rate is based on the bank’s updated assessment of the inflation outlook, the dynamics of underlying inflation, and the strength of monetary policy transmission.
„The disinflation process is well on track. Inflation has continued to develop broadly in line with the staff projections and is set to return to our two per cent medium-term target in the course of this year,” she said.
„Most measures of underlying inflation suggest that inflation will settle at around our target on a sustained basis.
„Domestic inflation remains high, mostly because wages and prices in certain sectors are still adjusting to the past inflation surge with a substantial delay,” she added.
The eurozone’s economy unexpectedly remained stable in the fourth quarter of 2024, according to Eurostat.