The strongest warning from a European official: the euro economy is in “de facto” recession.

European Central Bank Executive Board member Fabio Panetta said economic growth has almost stalled in the euro area, facing additional costs in rise as politicians face inflation record.

In the strongest warning from the European Central Bank about the damage the war has done in Ukraine, Panetta told Italian newspaper La Stampa that the region’s economy was “de facto.” in recession”.

That makes choices for the ECB more complex, he said, as monetary tightening aimed at containing inflation will end up hampering already weakening growth.

Ukraine’s war on the eurozone’s borders has hampered the economic recovery that followed the peak of the coronavirus pandemic, as the International Monetary Fund cut its 2022 growth forecast for the eurozone to just 2.8. %.

Highlighting the risks, German factory orders fell in March, falling more than expected after the Russian invasion put in shadow the economic outlook in Europe.

The Italian official, who has been a member of the ECB’s board of directors since 2020, said “it would be unwise to act without seeing Q2 GDP numbers first,” suggesting that he would rather wait longer before deciding on a rate hike. .

The European Central Bank interest rate meetings take place from 8 to 9 June and from 20 to 21 July. Although second-quarter GDP figures aren’t officially released until July 29, economic guidance is available sooner.

In an interview today, Thursday, Bank of Portugal president Mario Centeno said the second quarter numbers will be “very important”, describing a recession as a “possible scenario”, according to “Bloomberg”.

In a speech Thursday, European Central Bank chief economist Philip Lane described the timetable for monetary policy normalization as “fundamentally uncertain”.

Panetta claimed that inflation is in increase due to global factors that monetary policy can only address in limited way. This means that the ECB “cannot tame inflation alone without incurring in enormous costs for the economy “.

Recovery from the pandemic period in the euro zone may already falter, even as officials rejected the stagflation talk, as the economy grew just 0.2% in the first quarter compared to the previous three months.

Inflation inarea euro almost quadrupled the 2% target previously set by the central bank, amid new supply-side pressures after closures in China to contain the Corona virus epidemic. At the same time, any compensation in European consumption as restrictions are relaxed could vanish with the erosion of purchasing power.

The fallout from President Vladimir Putin’s war remains a major concern. The European Union has in plans to ban imports of Russian oil, which is likely to lead to further upward pressure on consumer prices. The Kremlin cut off the flow of natural gas to Poland and Bulgaria last week.

Panetta said ending the conflict “would ease tensions in international markets – for oil, gas and food – which are driving up inflation,” according to Bloomberg.

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