ECB's Makhlouf says he believes soft demand will lead to a fall in prices

Author: Adam Button | Category: Central Banks

Comments from the Irish central bank governor

  • Says he believes that demand factors will continue to dominate and lead to a fall in prices
That's a window into the underlying thinking at the ECB. So far it's tough to argue against.

"Predicting how demand and supply shocks will interact over the medium to long term is not straightforward... As both demand and supply side factors will continue to impact on inflation, I believe that demand factors will dominate and lead to a fall in prices," Makhlouf told an online conference.

"Fear of infection, weak labour markets, heightened uncertainty and higher precautionary savings will lead to lower demand for goods and services which implies that the real natural rate of interest is likely to remain at low levels," he said.

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