European Central Bank President Christine Lagarde said on Thursday that euro area economy is expected to "slow down substantially" over the remainder of this year. She explained this is due to inflation, weakening in global demand due to tighter monetary policy, worsening terms of trade, as well as an expected slowdown in demand for services following the end of lockdowns.
Lagarde warned that the slowing economy "is likely to lead to some increase in the unemployment rate." On the subject of energy costs, she stated fiscal support measures to curb prices should be "temporary and targeted at the most vulnerable households and firms" to avoid adding to inflation.
