Expectations about price increases rise to highest level since July as central bank prepares for more interest rate cuts
The headquarters of the European Central Bank in Frankfurt. Euro zone consumers do not believe the European Central Bank will be able to fully tame inflation over the next 12 months, potentially complicating policymakers’ plans to continue lowering borrowing costs.
That rate would be significantly above the ECB’s target of keeping price increases at 2 per cent over the medium term. Households also fear the central bank will continue to miss that goal and are bracing for an average of 2.4 per cent of inflation over the next three years — the same rate as the bloc’s last inflation reading in December.
Perceived inflation by consumers last month was still much higher at 3.5 per cent, up from 3.4 per cent in November, the survey showed. Ms Lagarde indicated on Thursday that further rate cuts were likely, without committing to the pace, size and timing of such moves.
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