Eurozone economic growth could fall to zero – ECB — RT Business News

Economic growth in the euro zone has collapsed and could soon fall to zero, the vice president of the European Central Bank (ECB) said on Monday.

« We see that in the third and fourth quarters there is a significant slowdown and we can end up with growth rates close to zero“, said Luis de Guindos during a conference, according to Reuters.

Economic output has suffered from soaring energy costs and the loss of Russian natural gas, which has increased the risk of energy rationing in the upcoming heating season. High energy prices propelled eurozone annual inflation to 9.1% in August and is expected to push it up to 9.6% this month, a record high for the region.

The ECB raised interest rates earlier this month by an unprecedented 75 basis points, just weeks after a 50 basis point move to fight inflation. The regulator said more rate hikes are ahead, with analysts expecting another rate move in October, with more increases at each meeting through next spring.

De Guindos didn’t reveal how aggressive these upcoming moves will be, only noting that they will be « data dependentand pointing out that inflationary pressures have increased significantly in recent months.

ECB launches historic rate hike

Last week, the official said that the ECB will have to continue to take measures to fight inflation, because the economic slowdown is not enough to rein in consumer prices.

« Markets believe that the slowing economy alone would reduce inflation. In fact, it’s… not good. Monetary policy must play its part“, he said last week.

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