Finance
ECB's Makhlouf Flags Persistent Inflation Undershoot, Slowing Growth as Risks to Outlook
Published by Global Banking & Finance Review®
Posted on February 6, 2026
1 min readLast updated: February 6, 2026
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ECB's Gabriel Makhlouf warns of inflation undershoot and slowing growth in euro zone, emphasizing the need to monitor wage growth and economic developments.
ECB's Makhlouf Warns of Slowing Growth and Inflation Risks Ahead
Economic Outlook and Inflation Concerns
DUBLIN, Feb 6 (Reuters) - European Central Bank policymaker Gabriel Makhlouf identified a loss of momentum in euro zone economic growth or the possibility that inflation continues to undershoot the ECB's 2% target in a more entrenched manner as two risks to its outlook.
Wage Growth Projections
"On the undershoot, long-run inflation expectations remain anchored at our 2% target. This does not currently suggest a persistent undershoot dynamic, but we continue to closely monitor developments here," Makhlouf said on his blog on the Irish central bank's website.
Monitoring Inflation Developments
He singled out wage growth as an area for close attention, saying that surveys and forecasts suggesting it would settle at around 3% in 2026 to 2028 would mitigate the risk of a persistent inflation undershoot.
(Reporting by Padraic Halpin; editing by William James)
Key Takeaways
- •Gabriel Makhlouf warns of potential inflation undershoot.
- •Euro zone economic growth shows signs of slowing.
- •Wage growth projections are crucial for inflation targets.
- •Long-term inflation expectations remain anchored at 2%.
- •Monitoring of economic developments continues.
Frequently Asked Questions about ECB's Makhlouf flags persistent inflation undershoot, slowing growth as risks to outlook
1What is inflation?
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. Central banks attempt to limit inflation to keep the economy running smoothly.
2What is monetary policy?
Monetary policy refers to the actions taken by a central bank to control the money supply and interest rates to achieve macroeconomic objectives such as controlling inflation, consumption, growth, and liquidity.
3What is economic growth?
Economic growth is the increase in the production of goods and services in an economy over a period of time, typically measured as the percentage increase in real GDP.
4What is a central bank?
A central bank is a financial institution that manages a country's currency, money supply, and interest rates. It oversees the banking system and implements monetary policy.
5What are wage growth projections?
Wage growth projections are estimates of how much wages are expected to increase over a specific period, which can influence inflation and economic stability.
