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Euro zone inflation seen just above ECB’s target in 2025, poll shows
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FRANKFURT (Reuters) – Euro zone inflation is set to decline to 2.1% in 2025, just a shade above the European Central Bank’s target, an ECB poll of economists forecast on Friday.
The ECB raised interest rates for the fifth straight time on Thursday and signalled more hikes ahead, reaffirming it would stay the course in the fight against high inflation.
Its Survey of Professional Forecasters, which ECB policymakers use as a key gauge of market expectations, showed economists were expecting the euro zone central bank to eventually conquer inflation – but not before another two years.
Poll respondents put inflation at 5.9% this year and 2.7% the next, a slight increase from the previous survey round in October, the survey showed.
“According to respondents, these changes mainly reflect a combination of recent data outturns, ongoing stronger and broader than expected indirect effects of energy price developments as well as higher forecast wage growth,” the ECB said.
They then expected inflation to fall to 2.1% in 2025, which was not part of the survey in October, and stabilise there in the long term, the survey showed.
(Reporting By Francesco Canepa; Editing by Alex Richardson)
Inflation is the rate at which the general level of prices for goods and services rises, leading to a decrease in purchasing power. It is typically measured as an annual percentage change.
The European Central Bank (ECB) is the central bank for the euro and is responsible for monetary policy within the Eurozone, aiming to maintain price stability and manage inflation.
Monetary policy refers to the actions taken by a central bank to control the money supply and interest rates to achieve macroeconomic objectives such as controlling inflation, consumption, growth, and liquidity.
A central bank is a national institution that manages a state's currency, money supply, and interest rates. It oversees the banking system and implements monetary policy.
The European Central Bank aims to maintain inflation rates at around 2% over the medium term, which is considered conducive to economic stability and growth.
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