Inflation expectations of consumers in the euro zone edged lower in April, according to the European Central Bank – reinforcing plans to start lowering interest rates next week.
Prices are seen advancing 2.9 per cent over the next 12 months, down from 3 per cent in March, the ECB said on Tuesday in its monthly poll. That’s the lowest level since September 2021, it said.
The gauge for three years also fell to 2.4 per cent from 2.5 per cent, having been at that level for four months.
With a first cut in borrowing costs on June 6 looking like a done deal, some officials are starting to discuss the pace of possible subsequent moves.
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On Monday, France’s Francois Villeroy de Galhau said the ECB shouldn’t exclude cutting rates in both June and July, though hawkish policymakers including Executive Board member Isabel Schnabel recently came out in opposition to back-to-back moves.
Price growth in the 20 nation-bloc held steady at 2.4 per cent from a year ago in April, with analysts polled by Bloomberg estimating an uptick in May to 2.5 per cent. The data are due on Friday.
Last week, the ECB reported that a key measure of euro-area wages failed to slow at the start of 2024. Policymakers have zeroed in on wages, company profits and productivity to judge the disinflationary trend.
The ECB’s poll showed less pessimism among consumers on the economy, where they foresee a 0.8 per cent contraction over the next 12 months – compared with – 1.1 per cent in the previous round. – Bloomberg
