Eurozone inflation highlights ongoing challenge for Lagarde in 2025

Upcoming data showing faster inflation in the eurozone next week is expected to remind policymakers that although their 2% target may be approaching, it is still not quite attainable, News.az reports citing foreign media.

Consumer prices probably rose 2.4% in December from a year earlier, up slightly from the previous month’s result. The underlying gauge that strips out energy and other volatile items probably stayed at 2.7%, according to economists.

Such an outcome, stoked by fuel costs, will underscore the challenge still faced by European Central Bank President Christine Lagarde and her colleagues at the dawn of a new year. She heralded January with remarks expressing her hope that inflation will get to the goal at some point in 2025.

The ECB’s own projections show the fourth quarter as the moment when 2% may be achieved. Resurgent gas prices in recent days are just one of the elements of a shifting backdrop that could endanger that outlook, while threatened US trade tariffs might further cloud the horizon.

“We have made significant progress in 2024 in bringing down inflation and hopefully 2025 is the year when we are on target as expected and as planned in our strategy,” Lagarde said in a video posted on X on Wednesday. “Of course we will continue our efforts to ensure that inflation stabilises sustainably at that 2% medium-term target.”

The eurozone data will be published on Tuesday, concurrent with numbers from Italy, after releases in France and Germany during the preceding 24 hours.

All three of those national outcomes are anticipated by economists to show acceleration, just as Spain’s reading did in a report at the end of December.

In the past week, Bank of Greece Governor Yannis Stournaras predicted that the ECB will have cut 100 basis points off its deposit rate by the fall of 2025. Economists and investors see a similar path for borrowing costs.

By contrast, his Austrian colleague, Robert Holzmann, said that policymakers could consider waiting before delivering their next cut.

“Some energy prices are trending upwards again,” he told the Kurier newspaper. “But there are also other scenarios for how inflation could return, such as a stronger depreciation of the euro.”

News.Az