Inflation statement from ECB – Last Minute Economic News

Inflation statement from ECB – Last Minute Economic News

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The European Central Bank (ECB) announced the results of its Consumer Expectations Survey for February.

Accordingly, the average inflation expectation of consumers in the Eurozone for 12 months decreased from 3.3 percent to 3.1 percent. “These expectations are at their lowest level since the unjust war Russia launched against Ukraine in February 2022,” the ECB’s statement said.

EXPECTATIONS FOR THE NEXT 3 YEARS

Consumers’ inflation expectations for the next 3 years remained constant at 2.5 percent. The expectation of consumers in the region regarding economic growth was minus 1.1 percent.

The ECB Consumer Expectations Survey is published monthly. The survey is conducted by interviewing approximately 14 thousand people from Germany, France, Italy, Spain, the Netherlands and Belgium, which represent approximately 85 percent of the Eurozone GDP.

Inflation expectations play an important role in the central bank’s monetary policy. The outlook for inflation will determine how far and at what pace the ECB will go in terms of interest rate hikes or cuts.

Meanwhile, annual inflation in the Eurozone, which was 2.8 percent in January, decreased to 2.6 percent in February. Core inflation in the 20-country region fell from 3.3 percent in January to 3.1 percent in February.

ECB’S TARGET IS 2 PERCENT INFLATION

According to the predictions made by the ECB, which targets 2 percent inflation in the medium term, this target is not far away.

The ECB had increased interest rates by a total of 450 basis points in 10 consecutive meetings since July 2022. The Bank increased the deposit interest rate to 4 percent at its meeting in September 2023 and did not make any changes in the October, December, January and March meetings.

It is noteworthy that the ECB is now increasingly moving towards its first interest rate cut.

European Central Bank President Christine Lagarde stated on March 20 that the Bank will have sufficient assurance to decide on the first interest rate cut, probably in June 2024, and said, “We cannot commit in advance to the path that interest rates will follow after the first interest rate cut.”

The central bank presidents of Germany, Italy, the Netherlands, Slovakia, Spain, Ireland and Greece had pointed to June for an interest rate cut.

The European Central Bank will meet on April 11 and June 6 to set interest rates.

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