Euro Zone Inflation Expectations Rise

FRANKFURT (Reuters) – Eurozone households increased their inflation expectations in November, as indicated by a European Central Bank (ECB) poll, reflecting the enduring psychological impact of years of high inflation.

The ECB has been progressively reducing interest rates after successfully bringing down price growth to just above its 2% target. However, recent indicators, including Monday’s German inflation data, suggest that the challenge may not be fully resolved.

In the ECB’s Consumer Expectations Survey, the median respondent anticipated price growth of 2.6% over the next 12 months in November, up from 2.5% in October — marking the second consecutive increase.

Expectations for three years into the future also rose, from 2.1% to 2.4%, the highest level since July. The ECB has previously regarded such expectations as being “around” its 2% target, indicating that this latest survey alone is unlikely to change the ECB’s intention to continue reducing borrowing costs.

Investor confidence has waned regarding the central bank’s ability to cut rates four times by June.

Inflation data for the eurozone is set to be published at 1000 GMT.