Blog Post

Chart of the week: IMF forecasts euro area inflation to stay well below 2% target for years to come

The IMF recognizes that given the bleak outlook for the euro area real economy, if the ECB continues with its relatively hawkish monetary policy approach it will take 5 years for inflation to converge to just 1.5%.

By: and Date: October 14, 2014 Topic: Macroeconomic policy

In the April 2014 update of the World Economic Outlook (WEO) released this week, the International Monetary Fund (IMF) forecasts a fall in the average inflation for the euro area to 0.9% in 2014, down from 1.3% in 2013. For 2015 and 2016, inflation is expected to remain well below the 2% policy rate, at approximately 1.2% and 1.3%. While the fall in inflation for 2014 was largely anticipated in recent estimates released by Eurostat, the IMF forecasts might be taken as further support for the claim that inflation will be lower than 2% in the medium term. Indeed, the IMF forecasts usually display a strong mean-reverting behaviour, i.e. a speedy convergence to the long term inflation rate, which in case of the euro area is anchored at below but close to 2%. This trend is quite apparent when we check the realized inflation against each year’s April forecasts from the IMF. This time however, the IMF recognizes that given the bleak outlook for the euro area real economy, if the ECB continues with its relatively hawkish monetary policy approach it will take 5 years for inflation to converge to just 1.5%.

Average euro area Inflation percent change in different vintages of IMF WEO

Source: IMF WEOs

Read more on the IMF’s forecasts

Looking past the (West’s) end of the nose

The global economy’s Groundhog Day

New IMF growth forecasts: EU revised downward, once again

The IMF’s false confession


Republishing and referencing

Bruegel considers itself a public good and takes no institutional standpoint. Anyone is free to republish and/or quote this post without prior consent. Please provide a full reference, clearly stating Bruegel and the relevant author as the source, and include a prominent hyperlink to the original post.

Read about event More on this topic
 

Past Event

Past Event

Green public investment after COVID-19

How can the public sector meet the climate funding needs of the EU?

Speakers: Zsolt Darvas, Elena Flores, Louise Skouby and Laurent Zylberberg Topic: Macroeconomic policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: July 5, 2022
Read about event
 

Upcoming Event

Jul
6
12:30

Shifting taxes in order to achieve green goals

How could shifting the tax burden from labour to pollution and resources help the EU reach its climate goals?

Speakers: Heather Grabbe, Femke Groothuis, Carola Maggiulli, Niclas Poitiers and Kinga Tchorzewska Topic: Green economy, Macroeconomic policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels
Read article More by this author
 

Opinion

European governance

Putin’s War and the German Economic Model

After the fall of communism, Germany went from being the sick man of Europe to being its leading economic power, largely by harnessing the benefits of global supply chains. But now that a new era of deglobalization is dawning, Germany will have to think carefully about how it should manage its dependence on international trade.

By: Dalia Marin Topic: European governance, Macroeconomic policy Date: July 4, 2022
Read article More by this author
 

Podcast

Podcast

A decade of economic policy

Guntram Wolff looks back at the past decade of Bruegel contribution to economic policy in Europe.

By: The Sound of Economics Topic: Banking and capital markets, Digital economy and innovation, European governance, Global economy and trade, Green economy, Inclusive growth, Macroeconomic policy Date: June 30, 2022
Read about event More on this topic
 

Past Event

Past Event

Autonomous, digital and green Europe: a conversation with Margrethe Vestager

At this event Margrethe Vestager will touch on strategic autonomy, digital regulation and the implications of the Green Deal on competition.

Speakers: Guntram B. Wolff and Margrethe Vestager Topic: Macroeconomic policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 29, 2022
Read article More on this topic More by this author
 

Blog Post

The implications for public debt of high inflation and monetary tightening

Expected increases in interest rates and reductions in real GDP growth rates will result in relatively small increases in public debt-to-GDP ratios, but inflation will reduce debt ratios very substantially

By: Zsolt Darvas Topic: Macroeconomic policy Date: June 29, 2022
Read article More by this author
 

Blog Post

European governance

Discretion lets Croatia in but leaves Bulgaria out of the euro area in 2023

Crucial decisions about whether a country can join the euro area depend on questionable discretionary decisions.

By: Zsolt Darvas Topic: European governance, Macroeconomic policy Date: June 22, 2022
Read article Download PDF More on this topic
 

Working Paper

Measuring macroeconomic uncertainty during the euro’s lifetime’

The basic idea is that observable forecasts of macroeconomic variables are transformations of the sets of macroeconomic information, which are so complex as to be unobservable, prevailing when the forecasts are made.

By: Monika Grzegorczyk and Francesco Papadia Topic: Macroeconomic policy Date: June 20, 2022
Read article More by this author
 

Podcast

Podcast

Growth for good?

Can economic growth be a force for good and help in the fight against climate change?

By: The Sound of Economics Topic: Green economy, Macroeconomic policy Date: June 15, 2022
Read about event
 

Upcoming Event

Sep
6-7
09:00

Bruegel Annual Meetings 2022

The Annual Meetings are Bruegel's flagship event which gathers high-level speakers to discuss the economic topics that affect Europe and the world.

Topic: Banking and capital markets, Digital economy and innovation, European governance, Global economy and trade, Green economy, Inclusive growth, Macroeconomic policy Location: Palais des Academies, Rue Ducale 1
Read article Download PDF
 

Working Paper

Raising EU productivity through innovation: Lessons from improved micro data

Combining recent unique firm-level data and state-of-the art research methodologies, MICROPROD research provides a better overview of which firms are most likely to adopt digital technologies and to innovate, and to turn these investments into productivity growth.

By: Reinhilde Veugelers and Frederic Warzynski Topic: Digital economy and innovation, Macroeconomic policy Date: June 13, 2022
Read article Download PDF More on this topic More by this author
 

Working Paper

Technology, trade, work councils and income distribution: new insights from MICROPROD

Using various micro datasets, Work Package 5 of the MICROPROD project made significant contributions to our understanding of the distributive implications of trade and technological change.

By: Zsolt Darvas Topic: Macroeconomic policy Date: May 31, 2022
Load more posts