The European Central Bank’s (ECB) latest Survey of Professional Forecasters predicts that eurozone inflation will continue to slow in the coming years. The survey suggests that inflation could even fall below the ECB’s 2% target by 2026. This comes as the ECB has been aggressively raising interest rates to combat inflation, which has been above target for years.
The survey forecasts inflation to average 2.4% in 2023 and 2.0% in 2024. By 2026, inflation is projected to reach 1.9%, dipping below the ECB’s target. Long-term inflation is expected to stabilize at 2% by 2028. The survey’s predictions for inflation are even more optimistic than the ECB’s own in-house forecasts.
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This optimistic outlook is attributed to the anticipated easing of price pressures, driven by weaker economic growth. The ECB’s aggressive rate hikes are expected to continue taking effect, contributing to the decline in inflation. Despite the positive outlook, the global economic environment remains uncertain and geopolitical tensions could impact the eurozone’s trajectory. The ECB will continue to monitor inflation closely and adapt its monetary policy as needed.