Economics and markets

Persistent inflationary pressure turns Europe’s monetary policy hawkish

June 15, 2022

Inflation is spreading and deepening
Vanguard’s inflation forecast for Europe before and after Ukraine invasion
Line graph showing headline inflation in the euro area reaching 5% at the start of 2022, then two lines splitting from thereon. One line shows Vanguard’s prediction before Russia’s invasion of Ukraine. That line steadily declines falling below 2% by early 2023. The other line shows Vanguard’s current forecast, which spikes almost to 9% in late 2022 before it starts to decline, falling below 2% by late 2023.
The ECB prioritizes inflation
Vanguard indicators suggest no recession in 2022
Vanguard’s leading economic indicators plummeted in 2022 but remain in positive territory
Line graph shows the Vanguard Leading Economic Indicator or VLEI, and the  Focused VLEI for 19 years ended June 1, 2022. Each line dips below zero roughly before or around the time of recessions. The VLEI line, and to a lesser extent the Focused VLEI line, spikes at the start of 2022 before taking a plunge, but remains above zero as of mid-2022.
What could push the euro area into recession

Contributor

Roxane Spitznagel
Vanguard Insights

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