Eurozone cuts short-term inflation forecast to 3.1%- ECB

Eurozone consumers lowered their near-term inflation expectations to 3.1 per cent for the coming year, down from the previous month’s forecast of 3.3 per cent, according to a recent survey by the European Central Bank (ECB) cited by Reuters on Tuesday.

These expectations are at their lowest since the onset of Russia’s war against Ukraine in February 2022.

However, the inflation outlook for the three years ahead remained steady at 2.5 per cent. Actual inflation eased to 2.6 per cent in February, down from 2.8 per cent in January.

The ECB anticipates that the inflation rate will continue to fall this year, aiming to reach its 2 per cent target by 2025.

This decrease in price growth has led policymakers to discuss interest rate cuts openly. The ECB is expected to make its first reduction in the record-high 4 per cent deposit rate in June, with at least two more cuts anticipated this year.

Meanwhile, economic growth expectations for the next 12 months remained unchanged, with consumers predicting a mild contraction. The unemployment rate for the next 12 months is also expected to remain steady.