Consumer expectations regarding eurozone inflation marked a notable drop, bolstering the scenario that their upward cycle will end in the summer interest rates from the ECB. In particular, inflation is expected to be 4.1% for the next 6 months compared to 5% in March, as reported in ECB monthly report. Over the next three years, they fell to 2.5% from 2.9%, approaching the medium-term target of 2%.

Recent poll results show an uneven decline in inflation, which reached a record level last year. The March survey revealed a “significant” increase in price expectations. Since then, however, the performance has been encouraging. Inflation slowed to 6.1% in May, while core inflation, which excludes volatile prices such as energy, fell more than expected to 5.3%. Data released by Eurostat last week confirming signs of lower inflation was a welcome development for both ECB officials and governments as households suffer an unprecedented accuracy crisis. Inflation expectations for next year have fallen to their lowest levels since 2020, according to the Commission poll. rates. the cost of borrowing to ensure that inflation returns to the 2% target. ECB Governing Council member Boris Vuzic told Bloomberg this week that the risk of a rate hike remains. Investors and most economists expect two more increases of 0.25%, with the deposit rate peaking at 3.75%.

ECB President Christine Lagarde on Monday confirmed that interest rates would rise further to regain price control, saying “there are no clear signs” that structural inflation has peaked. Meanwhile, Dutch central banker Klaas Knott, one of the ECB’s hawks, warned yesterday that the eurozone is now suffering a domino effect due to higher energy prices, meaning it will be harder to bring down consumer prices. “Energy prices have shifted to other positions in the consumer basket, and wages and especially services are taking precedence over inflation. It is likely that it will be more difficult to reduce inflationary pressures in these sectors,” Knott said.