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Speaker 1: Finance ministers and central bank governors are discussing food, energy security,

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Speaker 1: and debt distress that they're meeting in India this week.

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Speaker 1: Another key theme, of course, is inflation, with global policy

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Speaker 1: makers increasingly diverging on policy stances for all the latest

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Speaker 1: and in exclusive interview Bloomberg's Haslinda is an India at

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Speaker 1: the G twenty four US hants take it away?

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Speaker 2: Well, Denny, you said it, dichotomy in inflation. For Europe

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Speaker 2: it's five point four percent, still way off the two

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Speaker 2: percent target. Yes, that great hike is coming. The question

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Speaker 2: is what happens after that. Let's get inside perspective. Follow

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Speaker 2: Gentiloni is European Commissioner for Economic and Financial Offairs. Thank

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Speaker 2: you so much for joining us. Great to see you

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Speaker 2: second time in six months. I'm just wondering your take

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Speaker 2: on inflation. Has underlying inflation peaked from today's perspective.

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Speaker 3: Well, if we look backwards, indeed, we had more than

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Speaker 3: ten percent of inflation last October, we are now, as

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Speaker 3: you said, at five points something. It's very different level

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Speaker 3: inflation among European member states. We have member states with

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Speaker 3: more than ten percent of inflation and member states that

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Speaker 3: are already below two percent of inflation. Our expectation is

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Speaker 3: that the headline inflation will decline slowly, not with the

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Speaker 3: speed of headline inflation. Core inflation will be slower. So

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Speaker 3: this is I think because of the fact that headline

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Speaker 3: inflation is influenced by energy prices and the core inflation

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Speaker 3: is influenced by the increase prices wages, services, So a

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Speaker 3: mixed situation. But overall, I think we will have in

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Speaker 3: twenty twenty four the level of inflation near to our targets.

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Speaker 2: So inflation has been underlying inflation has been For you,

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Speaker 2: is taxflation the right word to use to describe the

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Speaker 2: European economy right now?

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Speaker 3: Well, listen, we still have growth weak growth, of course,

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Speaker 3: slightly weaker than expected in the first quarter and probably

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Speaker 3: also in the second quarter. But if we look to

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Speaker 3: the last autumn, we were expecting a real recession, blackouts,

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Speaker 3: energy problems, supply problems for energy. These risks didn't manitialize.

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Speaker 3: I'm not saying that we don't have any risks ahead

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Speaker 3: of us, because in the tightening of monetary policy will

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Speaker 3: produce impact and also the energy transition. We are not

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Speaker 3: completely out of the woods. In Europe. We made a

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Speaker 3: miracle in going out of the dependency from Russian GATA

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Speaker 3: fossil fuels, but it will be a challenge also for

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Speaker 3: next frind. Overall, I would say we are not in

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Speaker 3: a stackflation situation. We still have growth and we expect

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Speaker 3: in twenty twenty four to have stronger growth, and we

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Speaker 3: have an incredibly resilient labor market.

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Speaker 2: Manufacturing though remains like lost. We're seeing pmis across the world,

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Speaker 2: especially in Asia in the doldrums. How much of a

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Speaker 2: risk is that and how are you assessing the risk

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Speaker 2: from China which continues to give really weak data.

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Speaker 3: Yes, the reopening of the Chinese economy proved not so

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Speaker 3: strong as expect. This is true. Manufacturer in the EU

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Speaker 3: showed negative data in the first quarter. Divergence is there.

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Speaker 3: Manufacturer and services in some countries, especially in the southern

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Speaker 3: part of Europe, will have an incredible positive tourist season,

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Speaker 3: which will of course few the economy. So I think

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Speaker 3: we have a mixed picture overall, but our estimate is

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Speaker 3: that starting in the last quarter of this year, we

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Speaker 3: will restart growth.

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Speaker 2: Also in manufacture article at the euphyscal rules which are

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Speaker 2: under review, can we expect an agreement by Yuren, what's

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Speaker 2: the sense out there?

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Speaker 3: We have to find an agreement. What against say is

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Speaker 3: that after a difficult start of our discussion, this has

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Speaker 3: always been a very controversial discussion within the European Union,

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Speaker 3: the physical rules. But after a difficult start, we have

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Speaker 3: now all member states that are engaged in finding a balance.

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Speaker 3: And the basis that the commission put on the table

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Speaker 3: is a very balanced one. So we have to take

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Speaker 3: into account. If you want to change these basis, you

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Speaker 3: have to change it with Kosho, because you can't change

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Speaker 3: it dramatically, otherwise you will not reach an agreement. Overall,

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Speaker 3: I'm confident that we need to give member states certainty

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Speaker 3: for their physical policies.

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Speaker 2: So women by your ent, is it possible? Also we

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Speaker 2: have a Germany pretty much insistent on stract debt reduction frameworks.

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Speaker 2: Is that realistic?

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Speaker 3: Well, I understand that the German position it is legitimate,

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Speaker 3: but I don't think it is realistic to impose two

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Speaker 3: restrictive common benchmarks, especially if you think to have these

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Speaker 3: restrictive common benchwark equal for all member states. The reality

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Speaker 3: is that the situation is very different among European countries

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Speaker 3: and it's difficult to have a restrictive benchmark fitting for everyone.

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Speaker 3: So some benchmark is already there in our proposal. We

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Speaker 3: can discuss this, but imposing a unique common safeguard very

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Speaker 3: restrictly for everyone is really problematic. It didn't work in

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Speaker 3: the last thirty years we had a very restrictive rule.

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Speaker 3: It didn't work. The overall that increased in the last

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Speaker 3: twenty thirty years, it didn't decrease. Why because we need

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Speaker 3: differentiation and ownership from member states if we want to

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Speaker 3: enforce our rules.

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Speaker 2: There's also the Evil Recovery Fund, and I know you're

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Speaker 2: urging member nations to contribute to about I think nineteen

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Speaker 2: billion euros. National governments have been pretty reluctant, if very reluctant.

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Speaker 2: Where else can you get a fund from?

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Speaker 3: Well? I think we have to continue this conversation because

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Speaker 3: this is how the European Union works. We have, of

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Speaker 3: course a an executive body at European level, but this executive body,

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Speaker 3: which is the Commission, has to deal with member states

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Speaker 3: in their autonomy. Do we need common funding? I think

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Speaker 3: the experience post pandemic showed that common funding was very useful.

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Speaker 3: We saved dozens of millions of labors through common mechanisms.

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Speaker 3: We are now using our recovery and Resilience facility which

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Speaker 3: is seven hundred billion euros, and we will need common

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Speaker 3: funding also for the green investments in the future. For sure,

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Speaker 3: after the end of this next generation EU Common Program,

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Speaker 3: which will be in twenty twenty six, I think we

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Speaker 3: will have to reflect on further common instrument.

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Speaker 2: Commissioner, we have to live there. We thank you so

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Speaker 2: much for your time that you had it. Danny apolog Adeloni,

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Speaker 2: European Commissioner for Economic and Financial Affairs of course, who

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Speaker 2: are coming to you from Gandhi Nagara where G twenty

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Speaker 2: meeting is happening right now.