FRANKFURT, July 26 — Financial experts’ forecasts of eurozone inflation in the coming years are ebbing further from the European Central Bank’s target of just below 2.0 percent, a survey published today showed.
The sombre outlook for price growth — the yardstick for the ECB’s mandated objective of price stability in the single-currency bloc — in part prompted policymakers to tee up multiple inflation-boosting policies at a meeting yesterday.
Along with lingering low inflation readings, the quarterly Survey of Professional Forecasters (SPF) “led the governing council to these proposals” for a potential interest rate cut in September and relaunch of mass bond-buying, ECB president Mario Draghi said in a press conference following the huddle.
Forecasts for inflation among the experts surveyed fell by 0.1 percentage point in each of the coming three years.
They now see 1.3 per cent price growth this year, 1.4 per cent in 2020 and 1.5 per cent in 2021, with a longer-term outlook of 1.7 per cent.
Come September, the ECB will be armed with a new set of its own quarterly economic forecasts.
Central bank staffers’ projections for June were slightly more optimistic than the latest survey.
Expectations in the poll for so-called “core” inflation — which excludes more volatile energy, food, alcohol and tobacco prices — also fell 0.1 per cent in each year to 2021.
The experts now see core inflation of 1.1 per cent in 2019, 1.3 per cent next year and 1.5 per cent in 2021.
But the outlook for economic growth over the coming years was largely unchanged, at 1.2 per cent this year, 1.3 per cent in 2020 and 1.4 per cent in 2021.
“Respondents cited both the risk that the euro area economy will grow more slowly than expected and the risk that the external environment will prove more disinflationary than at present,” the ECB noted in the survey.
Draghi said yesterday the eurozone outlook was “getting worse and worse in manufacturing especially”.
The key pillar of major economies like Germany is suffering from external threats, including trade tensions with the United States and the risk of a no-deal Brexit. — AFP
Source: The Malay Mail Online