The ECB is dealing with both record-high inflation and a slowing economy.
Bloomberg | Bloomberg | Getty Images
The European Central Bank is set to hike interest rates again on Thursday, with policymakers in Frankfurt shifting their focus to core inflation and trying to predict when sky-high consumer prices might fall.
Euro area inflation has dipped in the last few months as energy prices have come down. But core inflation, which strips out energy and food, keeps on rising at a steady pace.
“With the economy proving more resilient to the energy shock and the labour market still tight, we think price pressures stemming from the services sector will take much longer to materially cool,” said Paul Hollingsworth, chief economist for Europe at BNP Paribas, in a recent research note.
The euro area economy is proving more resilient than expected and even avoided a contraction in the last quarter of the year. France and Spain recorded growth which made …