FRANKFURT (Reuters) -Euro zone consumers have lowered their inflation expectations for the next year and kept unchanged their view further ahead, indicating that price growth is no longer a major worry, the European Central Bank’s Consumer Expectations Survey showed.
Inflation has been hovering around the ECB’s 2% target for most of this year and the bank expects it to be at or just below target for years to come, suggesting that the post-pandemic inflation surge is now fully tamed.
Median expectations for the next 12 months eased to 2.7% in September from 2.8% in August, while expectations for three years ahead were unchanged at 2.5%, the ECB said on Tuesday based on a monthly survey of 19,000 adults in 11 euro area countries.
For five years ahead, inflation expectations were also unchanged, at 2.2%, the ECB added.
Consumers’ benign view on inflation only adds to the case for the ECB to keep policy unchanged at its regular policy meeting on Thursday after 2 percentage points’ worth of rate cuts in the year to last June.
Policymakers now say that risks to the outlook are balanced so it is best for the ECB to keep policy steady as its 2% deposit rate neither restricts economic growth nor stimulates it.
Consumers also had an unchanged view on their own income growth, even if they saw somewhat higher spending in the year ahead, the ECB added.
Economic growth and unemployment expectations were also steady.
(Reporting by Balazs Koranyi; Editing by Hugh Lawson)
