European Central Bank President Christine Lagarde said Thursday that policymakers are unlikely to raise interest rates next year after the bank unveiled plans to start tapering its stimulus in March.
Eurozone inflation forecast for next year was raised sharply to 3.2 percent from 1.7 percent, the latest set of ECB staff macroeconomic projections unveiled by Lagarde showed.
Inflation is seen slowing to 1.8 percent in 2023 versus the earlier forecast of 1.5 percent. Price growth is projected to hold steady at 1.8 percent in 2024.
The inflation estimate for this year was lifted to 2.6 percent from 2.2 percent.
ECB staff also raised the core inflation forecasts and now sees 1.4 percent in this year, 1.9 percent next year, 1.7 percent in 2023, and 1.8 percent in 2024.
"If price pressures feed through into higher than anticipated wage rises or the economy returns more quickly to full capacity, inflation could turn out to be higher," Lagarde said in her introductory statement to the post-decision press conference.
Earlier on Thursday, the ECB said it will discontinue purchasing assets under its Covid-19 pandemic stimulus scheme at the end of March and continue slowing asset purchases during the rest of next year, as support for maintaining an expansionary monetary policy is fast drying up in the face of stubbornly high inflation in the euro area.
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