Finance
ECB survey sees lower inflation, 2% over the longer term
Published by Global Banking & Finance Review®
Posted on July 25, 2025
2 min readLast updated: January 22, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on July 25, 2025
2 min readLast updated: January 22, 2026
The ECB survey indicates inflation will stabilize at 2% long-term, influencing interest rate policies. Economic growth is slightly better than expected.
FRANKFURT (Reuters) -Euro zone inflation may be lower this year and next than previously expected and will remain around the European Central Bank's 2% target in the longer term, the ECB's Survey of Professional Forecasters showed on Friday.
Inflation has come down quickly over the past years and now hovers around the 2% target, a key reason why the ECB left interest rates unchanged on Thursday and hinted that it was not in any hurry to cut rates any further after halving its main rate to 2% from 4% since June 2024.
Inflation is now seen averaging 2% this year, below the 2.2% predicted three months ago, and will then slow to 1.8% next year, below a previous expectation for 2%, the survey, a key input in policy deliberations, indicated.
"Tariffs were expected to have a small downward impact (on inflation) in the nearer term but to be broadly neutral on balance in 2027 and over the longer-term horizon," the ECB said.
The dip below target is likely to be temporary, however, and price growth will then return to 2% in subsequent years, then stay at the bank's target even in the longer term, defined as 2030, the survey showed.
Steady inflation around 2% and relatively healthy economic growth is why some policymakers are starting to doubt if more rate cuts are needed and financial markets see only a 50% chance of another cut in the current easing cycle.
Economic growth is also likely to be a bit quicker than predicted, accelerating to 1.1% this year, above the 0.9% seen earlier, the survey indicated.
Growth has been expected to take a big hit this year from trade tensions with the United States but the first half of the year was somewhat stronger than previously thought, indicating economic resilience.
Unemployment expectations remained broadly unchanged and the jobless rate is seen at 6.3%, dipping to 6.2% over the longer term.
(Reporting by Balazs Koranyi; Editing by Emelia Sithole-Matarise)
Inflation is now seen averaging 2% this year, which is below the 2.2% predicted three months ago.
The ECB predicts that inflation will return to 2% in subsequent years and remain at this target even in the longer term, defined as 2030.
Economic growth is likely to be quicker than predicted, accelerating to 1.1% this year, which is above the earlier estimate of 0.9%.
Unemployment expectations remain broadly unchanged, with the jobless rate seen at 6.3%, dipping to 6.2% over the longer term.
Tariffs are expected to have a small downward impact on inflation in the nearer term but are projected to be broadly neutral by 2027.
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