FRANKFURT – The euro zone will keep away from a recession this yr and progress will speed up noticeably after bottoming out within the second quarter, a key European Central Financial institution survey confirmed on Monday.
The 19-country foreign money bloc has been hit by fallout from Russia’s invasion of Ukraine, which has sapped confidence, funding and households’ buying energy by way of sharply greater gasoline and meals costs.
The economic system is now anticipated to develop by 0.1% within the second quarter, accelerating to 0.4% in each the third and fourth quarters, the ECB‘s Survey of Financial Analysts confirmed.
The survey, a key enter in ECB coverage deliberations, additionally predicted that the ECB would increase its deposit charge by a mixed 75 foundation factors this yr and a mixed 150 foundation factors by the tip of subsequent yr, with the speed peaking at 1.25% in mid-2024.
The survey, introduced to policymakers ultimately week’s ECB assembly, was compiled earlier than the ECB mentioned that charges would rise by 25 foundation factors in July and probably by a much bigger margin in September.
The speed hike will come because the ECB fights to tame inflation, which is now seen again on the 2% goal by the primary quarter of 2024, in keeping with the survey.
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