Lagarde: Eurozone Inflation Could Tick up in Coming Months

European Central Bank President Christine Lagarde (Reuters)
European Central Bank President Christine Lagarde (Reuters)
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Lagarde: Eurozone Inflation Could Tick up in Coming Months

European Central Bank President Christine Lagarde (Reuters)
European Central Bank President Christine Lagarde (Reuters)

Eurozone inflation could tick up in the coming months but European Central Bank interest rates held at their current level at least for several quarters could still get price growth back to 2%, ECB President Christine Lagarde said on Friday.

The ECB snapped a streak of 10 straight rate hikes last month and investors now expect the bank's next move to be a cut, perhaps as soon as in April.

A rapid fall in inflation to 2.9% last month only reinforced these bets but Lagarde warned that quick disinflation may be ending soon and price growth could even accelerate in the near term as high energy prices get knocked out of year-on-year comparisons.

"There will be a resurgence of probably higher numbers going forwards and we should be expecting that," Lagarde told a Financial Times event. "Even if energy prices were to remain reasonably flat now, we will be losing the base effect come January and February."

The ECB, which left its deposit rate unchanged at 4% last month, sees inflation back at target only in late 2025 with consumer price growth broadly stagnating at around 3% for most of 2024, according to Reuters.

Still, Lagarde hinted that even if inflation picks up, another rate hike may not be needed.

"We are at a level where we believe that, if kept long enough, - and this long enough is not trivial - will take us to the 2% medium-term target," Lagarde said.

When asked what long enough means, Lagarde said no change should be expected in the "next couple of quarters".

The ECB has repeatedly warned that budget restraint was a necessity to get inflation down and too much spending could force the central bank to tighten policy again to counter the fiscal impulse.

ECB chief economist Philip Lane earlier this week said that inflation readings could be in the "high twos and low threes" in 2024 before a fall to 2% in 2025.



SPARK Attracts More Than 60 Investors

 A solar energy project in Saudi Arabia (Asharq Al-Awsat)
 A solar energy project in Saudi Arabia (Asharq Al-Awsat)
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SPARK Attracts More Than 60 Investors

 A solar energy project in Saudi Arabia (Asharq Al-Awsat)
 A solar energy project in Saudi Arabia (Asharq Al-Awsat)

The King Salman Energy Park (SPARK), located in Buqayq in eastern Saudi Arabia, has successfully attracted more than 60 investors, with total investments exceeding $3 billion.
SPARK was developed as an integrated industrial ecosystem aimed at maximizing economic benefits by strengthening the energy sector in the Kingdom and the broader region. It plays a key role in advancing the goals of Vision 2030 by supporting efforts to build a strong, prosperous, and diversified economy.
The city is also positioned as a prime destination for investors seeking growth and success within a global industrial ecosystem founded on excellence and innovation. It is expected to contribute over $6 billion annually to Saudi Arabia’s GDP and create up to 100,000 direct and indirect jobs.
On Sunday, the King Salman Energy Park announced that seven factories are already operational, with an additional 14 under construction.
By the end of last year, SPARK had signed lease agreements with two new investors, in addition to the start of construction on several major projects by existing investors.
These developments are key to SPARK’s continued growth and progress, playing a crucial role in its mission to localize essential products and services within the energy sector’s value chain.
The total value of the lease agreements exceeds SAR 30 million, marking significant investments that will drive sustainable industrial growth in the Kingdom.
As part of these deals, Abdulaziz & Brothers (A&BC), a company specializing in professional safety tools and equipment, will begin producing high-quality personal protective gear for the industrial and construction sectors by establishing its first facility in SPARK.
Meanwhile, Enjaz Al Mustaqbal Industrial Company plans to build a facility to support localization efforts in the heating, ventilation, and air conditioning (HVAC) sector.
SPARK also revealed the start of construction on two major projects with a combined investment of SAR 250 million.
BAS Gulf Industrial Company, a subsidiary of the National Metal Manufacturing and Casting Company (Maadaniyat), plans to expand its operations by the fourth quarter of 2024, focusing on the manufacturing of industrial valves and providing post-sales technical services.
Global software and engineering leader Emerson has also begun construction at SPARK, preparing to launch its advanced technology operations, which are expected to commence by the fourth quarter of 2024.