Consumer expectations for euro-area inflation fell for a second month — supporting recent remarks by European Central Bank officials that interest-rate hikes may be nearing their end.
(Bloomberg) — Consumer expectations for euro-area inflation fell for a second month — supporting recent remarks by European Central Bank officials that interest-rate hikes may be nearing their end.
Expectations for the next 12 months dropped to 4.6% in February from 4.9% in January, the ECB said Tuesday in its monthly survey. For three years ahead, they declined to 2.4% from 2.5%.
The numbers add to an ever-more uncertain economic backdrop as the ECB analyzes its next steps, with the banking turbulence and OPEC+’s surprise decision to cut output further complicating matters. Officials have raised borrowing costs by 350 basis points since last July.
Inflation has now been slowing for several months and eased by the most on record in March, to 6.9%, after the spike in energy prices caused by Russia’s invasion of Ukraine faded. But that came with a record reading for underlying price growth, a measure that’s becoming a key focus for rate-setters in Frankfurt.
Headline inflation, while softer, remains well above the 2% target.
Robert Holzmann, the hawkish head of the Austrian central bank, said Monday in an interview that another 50 basis-point rate hike is “still on the cards” for the ECB’s next meeting — if the turmoil that’s rocked the global banking system after the collapse of Silicon Valley Bank doesn’t worsen.
In its survey, the ECB also said:
- Economic growth expectations for the next 12 months continued to increase, rising to -0.9% from -1.2%
- Unemployment rate in 12 months seen at 11.5% vs 11.6%
- Income expected to grow by 1.2% over next 12 months, down from 1.3%
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