Euro Zone Consumers Trim Inflation Expectations, ECB Winning Battle - Multibagger
Euro zone consumers have trimmed their inflation expectations for the next 12 months to the lowest level in three years, a European Central Bank poll showed on Friday, in a further sign the ECB is close to winning its battle to rein in prices.
The Consumer Expectations Survey is a gauge of whether households have faith in the ECB's ability to bring inflation down to its 2% target, which in turns may influence their behaviour when spending, saving or asking for pay hikes.
In the August edition of the survey, the median respondent saw prices growing by 2.7% in the following 12 months, the slowest pace since September 2021 and down from 2.8% in July.
Consumers also cut their inflation expectations for three years ahead - from 2.4% to 2.3%, the lowest level since June.
The ECB reduced borrowing costs earlier this month, adding to a first cut in June, on the back of weaker growth forecasts and expectations for a continued, albeit bumpy, fall in inflation over the next year.
And policy doves at the euro zone central bank are preparing to fight for a further reduction in October after a string of weaker-than-expected economic data, a move likely to meet resistance from their more hawkish peers, sources told Multibagger.
Analysis:
The European Central Bank's efforts to rein in inflation seem to be working as consumers have lowered their inflation expectations. This could potentially lead to changes in consumer behavior such as spending, saving, and wage negotiations. The ECB's recent actions to reduce borrowing costs indicate their commitment to addressing inflation concerns. However, the push for further reductions in October may face resistance from more conservative members of the central bank. Overall, these developments could have implications for the euro zone economy and financial markets.