The European Central Bank (ECB) said in its economic bulletin on Thursday that it intends to keep increasing interest rates "significantly at a steady pace and in keeping them at levels that are sufficiently restrictive" in order to reach the 2% inflation target. It reaffirmed that it will raise rates by 50 basis points in March.
The ECB said the risks to the outlook for economic growth have become more balanced. While the war in Ukraine, supply disruptions, and a possible global economic downturn remain downside risks, the energy shock could fade away faster than anticipated, pushing growth up. Inflation could still grow due to "existing pipeline pressures," a stronger-than-expected economic rebound in China, and a persistent rise in inflation expectations. Meanwhile, the fall in energy prices and demand could bring prices down, especially over the medium term.
