On average (median), consumers in February assumed that the inflation rate would be 3.1 percent within twelve months, as the European Central Bank (ECB) announced on Tuesday in Frankfurt.
This means that expectations are now “at their lowest level since the start of Russia’s unjustified war once morest Ukraine in February 2022,” said the ECB. In the previous January survey, consumers had predicted a rate of 3.3 percent. As in the January survey, consumers now expect inflation to reach 2.5 percent within three years.
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The ECB is aiming for an inflation rate of 2.0 percent in the medium term. She sees this as the ideal level for the economy in the 20-nation community. Inflation was most recently at 2.6 percent in February following 2.8 percent in January. The ECB’s goal is therefore no longer far away. The monetary authorities are now increasingly heading towards an initial interest rate cut.
First interest rate cut in June?
ECB President Christine Lagarde recently said at an event in Frankfurt that the central bank would probably have enough security in June to decide on a first step down. According to a survey by the Reuters news agency, a large majority of economists currently expect a first interest rate cut in June.
The monthly data on consumers’ inflation expectations always provide the ECB with important information regarding the inflation picture in the euro area. Around 19,000 people from eleven euro countries, including Austria, Germany, France and Italy, are currently taking part in the survey. The ECB’s next interest rate meeting will take place on April 11th in Frankfurt.
