FRANKFURT – Euro zone inflation and growth expectations have continued to fall, a key European Central Bank survey showed on Friday, providing further justification for the ECB’s latest stimulus package.
Facing a protracted slowdown, the ECB cut rates and relaunched an indefinite bond purchase scheme last month, generating push back from some policymakers who found the move excessive since the bloc was merely experiencing a slowdown and not a recession or the threat of deflation.
Inflation and GDP growth projections in the Survey of Professional Forecasters, a key input in the ECB’s policy deliberations, were cut for this year and each of the next two while the “longer term”, defined as 2024, stayed steady at relatively low levels.
The inflation forecast was cut to 1.2% from 1.3% for this year, to 1.2% from 1.4% in 2020 and 1.4% from 1.5% in 2021. The longer-term forecast was steady at 1.7%, which remains below the ECB’s inflation target of close to but below 2%.
Underlying inflation projections were also reduced and the longer-term forecast was cut to 1.6% from 1.7%.
The growth forecast was cut to 1.1% for this year from 1.2% and 1.0% from 1.3% for next year.