Eurozone Inflation Expectations Tick Up as ECB Eases Policy

Eurozone inflation expectations continued to rise in December, according to recent surveys from the European Central Bank. Consumer inflation expectations for the next 12 months increased for the third consecutive month, while professional forecasters revised upward their projections for both this year and next.

The ECB’s Consumer Expectations Survey revealed that median expectations for inflation over the next 12 months rose to 2.8% from 2.6% in November. Meanwhile, the ECB Survey of Professional Forecasters showed that HICP inflation expectations for this year were revised upwards by 0.2 percentage points to 2.1%.

Despite these upward revisions, the ECB recently lowered its interest rates for a fourth consecutive policy meeting, signaling a shift towards a more accommodative monetary policy stance. This move reflects the central bank’s commitment to guiding inflation back towards its target while navigating a challenging economic environment.