ECB Official: Eurozone Economy May Be Heading Towards 'Adverse Scenario'

The European Central Bank (ECB) Governing Council member, Demarco, has indicated that the eurozone economy might be moving towards the ECB's 'adverse scenario.' According to Jin10, Demarco emphasized the need for policymakers to remain patient and avoid hasty interest rate adjustments aimed at curbing inflation. He noted that if the adverse scenario materializes, the market's expectation of two rate hikes would be reasonable. However, Demarco downplayed the urgency for immediate action, highlighting that long-term inflation expectations remain stable, the ECB's credibility in fighting inflation is high, and the monetary policy stance was already robust before the crisis, with interest rates at neutral levels and inflation aligning with targets.