Lagarde: Slowdown May Deepen, Inflation Risks on Upside

The transcript discusses the economic slowdown in the euro area, driven by high inflation, gas supply disruptions, and declining confidence. It highlights the labour market's resilience but warns of potential unemployment increases. Fiscal policies should be temporary and targeted, with structural reforms to boost growth. Inflation is rising, mainly due to energy and food prices, with underlying pressures remaining high. Risks to economic growth are on the downside, while inflation risks are on the upside, influenced by geopolitical tensions and energy prices.

What is one of the main factors contributing to the economic slowdown in the third quarter?

• Stable energy prices

• High inflation reducing real income

• Improved business confidence

• Increased consumer spending

What is a potential consequence of the weakening economy on the labor market?

• Decrease in unemployment

• Increase in job creation

• Higher unemployment rates

• Stable employment levels

What should fiscal support measures focus on to avoid fueling inflation?

• Universal basic income

• Long-term subsidies

• Broad-based tax cuts

• Temporary and targeted support

Which component was the main driver of overall inflation in September?

• Energy prices

• Food prices

• Manufacturing costs

• Service sector prices

What has contributed to the build-up of inflationary pressures in the euro area?

• Appreciation of the euro

• Decreased import prices

• Stable currency exchange rates

• Depreciation of the euro

What is a significant risk to the economic growth outlook in the near term?

• Long-lasting war in Ukraine

• Improved consumer confidence

• Stable geopolitical conditions

• Decreasing energy prices

What could lead to higher than expected inflation over the medium term?

• Lower than anticipated wage rises

• Stable production capacity

• Decreasing food and energy prices

• Persistent rise in inflation expectations