Market News
Euro zone inflation to rebound to target next year, ECB survey shows - REUTERS
FRANKFURT, Feb 6 (Reuters) - Euro zone inflation is likely to remain broadly on the same path as seen three months ago, dipping below 2% this year, then returning to target in 2027, the European Central Bank's Survey of Professional Forecasters showed on Friday.
The ECB left interest rates unchanged on Thursday, arguing that its own inflation outlook is broadly unchanged and policymakers still saw price growth returning to the 2% target in the medium term after a well-telegraphed dip this year.
ECB President Christine Lagarde also said that risks remained unusually high but were broadly balanced, so policy was in a 'good place'.
The ECB's survey sees inflation at 1.8% this year and 2.0% next year, in line with predictions made three months ago. Price growth will then rise to 2.1% in 2028 but remain at 2.0% over the 'longer term,' which is defined as 2030.
Economic growth could be marginally higher this year, at 1.2% versus the 1.1% predicted three months earlier. It will then pick up to 1.4% next year, the survey, a key input in policy deliberations, showed.
Unemployment predictions also stayed unchanged, with the jobless rate seen at 6.3% this year, 6.2% in 2027, the ECB said.
Financial markets see a one-in-five chance that the ECB will still cut interest rates but investors expect rates to go up next year, mostly as Germany's fiscal splurge on defence and infrastructure lifts growth.
(Reporting by Balazs Koranyi; Editing by Toby Chopra)
