[1/2] Shoppers pay with €5 banknotes to buy eggs at a local market in Nice, France, April 26, 2023.Reuters/Eric Gaillard
FRANKFURT (Reuters) – European Central Bank (ECB) surveys released on Tuesday showed euro zone consumers had lowered their inflation expectations, suggesting underlying inflation remains robust. Despite the high risk, the surprise rally a month ago reassured policy makers.
ECB hiked interest rates by a total of 375 basis points over the past year to stem price runaways, but inflation returns to target of 2% as rapid wage growth and strong demand for services maintain inflationary pressure could take up to 2025. price.
Median inflation expectations over the next 12 months fell to 4.1% in April from 5.0% in March, according to a monthly survey of 14,000 adults, according to the ECB. decreased from 2.9% to 2.5%. Largest country in the Eurozone.
The figure comes after Dutch policymaker Klaas Nott, an outspoken policy hawk, has made cautiously optimistic comments about rising prices, arguing that the worst of Europe’s inflation problem is behind him. It was announced as a result of what happened.
Still, Knott warned that it could still be some time before inflation, which reached 6.1% in May, is fully brought under control.
“Inflation has been high for a long period of time, which has increased underlying inflationary pressures,” Knott said in his speech. “Price pressures in these areas are likely to be more difficult to contain.”
Still, Knott argued that long-term expectations were still “adequately” entrenched, and there was growing evidence that ECB policy was working in both funding conditions and macro indicators.
“It’s encouraging to see the first signs of recent monetary policy actually making its way into the real economy,” Knott added.
Many policymakers, including Knott, argue that the ECB’s June rate hike, widely believed to be a deal, will require additional measures in July to fully bring inflation under control. I’ve been
But the outlook for the future is even more uncertain. Deutsche Bundesbank President Joachim Nagel says it is not certain that interest rates will peak this summer, while French Governor François Villeroy de Galhau says rate hikes will end by the end of the summer. showed an idea.
The ECB’s survey of consumer expectations also contains new material that could underpin arguments calling for more prudent policy tightening.
Consumers expected more modest wage growth going forward, lower unemployment expectations, and were less pessimistic about the growth prospects in the region, even if they expected the economic contraction to continue. .
Reported by Balazs Koranyi.Editing: Bernadette Baum and Sharon Singleton
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