Speech by Philip R. Lane, member of the Executive Board of the ECB, Hutchins Center on Fiscal & Monetary Policy at the Brookings Institution

Washington, D.C., 8 February 2024

Today, I wish to report on the progress in disinflation in the euro area.

Chart 1 shows the dynamics of headline and core inflation, extended forward through 2026 on the basis of the December 2023 Eurosystem staff projections.^[1] Relative to its pandemic low point in late 2020, inflation started to increase in early 2021, rising above the two percent medium-term target in July 2021. Inflation continued to climb through the rest of 2021 and most of 2022, peaking at 10.6 percent in October 2022. Since late 2022, inflation has declined and stood at 2.8 per cent in January 2024. According to the December 2023 Eurosystem staff projections, inflation is expected to stabilise around the two per cent target from about the middle of 2025 onwards.