Fri, 28 Jan 2022

BRUSSELS, Belgium: In December, the inflation rate in the Eurozone reached a new record high, which raised further questions about the policies of the European Central Bank.

Preliminary data release on January 7 showed inflation for December reached five percent, compared to the same month last year, the highest ever on record and follows November's record high of 4.9 percent, mainly caused by higher energy prices.

With questions being raised as to whether the European Central Bank should be more proactive in combating rising prices, inflation has been in the spotlight after consecutive increases in recent months.

Last month, the European Central Bank said it would cut its monthly asset purchases, but it stressed that it will continue providing stimuli in 2022.

"Monetary accommodation is still needed for inflation to stabilize at the 2 percent inflation target over the medium term," the ECB said.

Its forecasts, updated in December, placed inflation at 1.8 percent in both 2023 and 2024, but it expects the rate to exceed its 2022 target at 3.2 percent.

The pandemic and inflation are among the most serious economic risks in 2022, economists argue.

Meanwhile, analysts at Berenberg said if inflation continues to rise, central banks could be forced to urgently step in, adding that the European Central Bank could prepare the ground for a first hike in the spring of 2023.

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