FRANKFURT (Reuters) – Euro zone consumers and economists increased their inflation expectation for this year, raising some doubts about European Central Bank’s prediction that price growth is firmly under control, separate surveys showed on Friday.
The ECB cut interest rates for the fourth straight meeting on Thursday and hinted at even more policy easing as the economy is now stagnating and inflation was “well on track” to reach the bank’s 2% target.
But others appear less confident.
The bank’s quarterly Survey of Professional Forecasters, a key input into policy deliberations, put consumer price growth at 2.1% this year, above the 1.9% seen three months earlier.
The survey’s outlook for 2026, however, remained unchanged at 1.9%, suggesting only a small delay in getting inflation down.
The ECB’s own projections, released in December, see inflation easing back to the 2% target just after mid-year. For now, price growth could oscillate around December’s 2.4% reading, ECB President Christine Lagarde said on Thursday.
Meanwhile the ECB’s survey of 19,000 euro area consumers showed a similar uptick in expectations last month.
Median expectations for inflation over the next 12 months increased for the third month in a row, to 2.8% from 2.6%.
However, three years out, expectations were unchanged at 2.4%.
Rising inflation expectations came even as the two surveys pointed to muted growth.
The professional forecasters lowered their growth outlook to 1.0% this year from 1.2% while consumers kept them unchanged at -1.3%.
This weak outlook is expected to have no dramatic effect on employment as both surveys see unemployment broadly steady compared to previous expectations.
(Reporting by Balazs Koranyi; Editing by Toby Chopra)
Comments