Inflation in the eurozone is expected to double to 6% this year, according to a key survey of forecasters, putting further pressure on the European Central Bank to raise interest rates for the first time in a decade, The Times reports.
The ECB’s quarterly survey of economists and forecasters revealed a doubling in inflation expectations from an average of 3-6% in 2022, three times the central bank’s target rate. The findings make up part of the ECB’s calculations over whether expectations for future inflation are anchored around its 2% target.
ECB President Christine Lagarde (pictured) has warned that the war in Ukraine means inflationary pressures have “intensified” in the short run, but she has failed to commit to a strict end-date for the bank’s mass bond-buying, which she had said previously would halt in the third quarter of this year.
Lagarde said after the ECB’s April governing council meeting that a rise in market and survey-based inflation expectations “warranted close monitoring”, as they could help to drive prices higher throughout the economy.
The euro fell to a new 2022 low against the dollar after Lagarde’s remarks. “The ECB’s reluctance to signal a faster pace of tightening leaves the euro vulnerable to further near-term weakness,” Lee Hardman, currency analyst at MUFG, a Japanese bank, said.
The forecasters’ survey also revised up next year’s projected inflation from 1.8 per cent to 2.4 per cent and kept 2024’s forecast unchanged at 1.8 per cent. Longer-term inflation expectations rose from 2 per cent to 2.1 per cent.
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