Frankfurt am Main: Financial experts in the European Union have lowered their inflation expectations for the coming years, a European Central Bank survey published on Friday showed, reflecting the institution’s complicated path to its price stability target.
In its quarterly survey of professional forecasters, the ECB found average price growth predictions had been revised down 0.1 percentage points for 2017, 2018 and 2019.
Forecasters now expect inflation to reach 1.5 per cent this year, followed by 1.4 per cent next year and 1.6 per cent in 2019.
The latest survey results are largely in line with the ECB’s own predictions, although central bank staff expect inflation to slow slightly in 2018 to 1.3 per cent.
ECB policymakers use the central bank’s powers to try and hold inflation at its target of close to, but below 2.0 per cent — the level believed to be most favourable to growth.
The bank has intervened massively in the economy in recent years to fend off the threat of deflation, offering cheap loans to banks, setting interest rates at historic lows and buying tens of billions of euros per month in government and corporate bonds.
But while central bank governors believe their policy has boosted economic growth in the 19-nation euro zone — reaching 0.6 per cent in the first quarter of 2017— there has been little sign of a corresponding surge in inflation.
That pattern was reflected in Friday’s survey, with forecasters upping their growth predictions for the coming years even as they saw rate of inflation turning out lower.
The private-sector experts match the ECB’s expectations for 1.9 per cent growth this year and 1.8 per cent in 2018, but remain slightly less confident for 2019 with a 1.6 per cent prediction — 0.1 percentage points lower than the central bankers. Friday’s survey of 56 professional forecasters was conducted on July 3-7. — AFP
Oman Observer is now on the WhatsApp channel. Click here
