An employee places an item in the window display at a delicatessen in the Piazza Campo di Fiori in Rome, Italy, on Tuesday, Dec. 6, 2016.
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In December, the central bank forecast that the euro zone economy would grow by 1.1% in 2025, saying that it expects euro area GDP growth to “weaken somewhat in the short term, amid significant uncertainty.”
“Survey-based indicators relevant for activity, such as the Purchasing Managers’ Index (PMI) and business and consumer confidence indicators from the European Commission, remain subdued,” the central bank stated in December.
The ECB had expected the economy to grow by 0.2% in the fourth quarter of 2024 as the one-off factors supporting growth last summer, such as the Paris Olympics, faded, and amid continuing “subdued confidence, high uncertainty and geopolitical tensions.” The central bank anticipates GDP growth to be 0.3% in the first quarter of 2025.
Central bank policymakers will be mindful of inflationary pressures in the region, with the euro zone consumer price index ticking upward in recent months, hitting 2.4% in December.
Core inflation, which strips out volatile food and energy prices, was unchanged at 2.7% for the fourth consecutive month in a row. The central bank forecast the inflation rate in the bloc to come in at 2.1% this year.