Economy ECB survey sees steady long term inflation expectations

ECB survey sees steady long term inflation expectations

The headquarters of the European Central Bank (ECB)
The headquarters of the European Central Bank (ECB)

Long-term euro zone inflation projections remain well anchored near the European Central Bank’s target, but GDP growth will be weaker than earlier thought, the ECB’s Survey of Professional Forecasters showed on Friday.

Inflation, now running at 0.4 percent, is expected to reach 1.8 percent by 2021, in line with previous projections, the survey of 47 forecasters showed.

Inflation has missed the ECB’s target of nearly 2 percent for years as high unemployment keeps a lid on wages, high debt levels choke investment, demand for goods and services remains weak and sharply lower oil prices drag down input costs.

For 2016, though, inflation will be lower than earlier thought, with the survey indicating a 0.2 percent reading, below the 0.3 percent seen earlier, the survey showed.

The GDP growth outlook for 2018 and the longer term have deteriorated, with forecasts for 2018 and 2021 at 1.5 percent and 1.6 percent, each 0.1 percentage points lower than three months ago.

For this year, projections for GDP growth have improved, with the survey predicting 1.6 percent expansion this year, above the 1.5 percent seen three months ago. That figure is still slightly behind the ECB staff’s 1.7 percent forecasts.