ECB to ‘see through’ any 2021 inflation jump to 2%

Annual euro zone inflation could rise to 2% towards the end of this year, but any such change would be driven by exceptional factors and thus have no clear impact on monetary policy, European Central Bank President Christine Lagarde said.

“We will see through that (because)… inflation will most likely go up, possibly to 2%, because of some technical and temporary reasons,” she told Thursday’s ECB post-policy meeting news conference.

“It important to look at the medium-term inflation outlook” which is subdued due to factors including low consumer demand and wage pressures, pandemic-driven slack in the economy and the trend of an appreciating euro, she added.

The ECB earlier raised its 2021 inflation forecast to 1.5% from 1% seen in December, which Lagarde also said reflected temporary factors.