Central Bank governor sees inflation slowing, and no rate hike in 2022

Gabriel Makhlouf tells KCLR he doesn't expect the ECB to raise rates, but that we must beware second-round effects of inflation

Gabriel Makhlouf: 'We do see inflation falling during the course of this year. It’ll probably stay over 2% throughout the course of this year, but it’ll fall from the level it’s been at.'

Inflation should slow in 2022 as supply-chain blockages and energy prices recede, but it’s likely to remain at more than 2% in the euro area for the rest of the year, according to Gabriel Makhlouf, the Governor of the Central Bank.

Mr Makhlouf said he doesn’t expect the ECB to raise interest rates in 2022, though policymakers will “have to keep a close eye”. The “big challenge” will be to watch for any second-round effects of inflation, such as wages rising without corresponding increases in productivity, he said in an interview with KCLR radio’s The Bottom Line.