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Eurozone Inflation to Be Weaker Than Expected in 2019, 2020 -ECB Survey

Experts surveyed by the European Central Bank expect growth and inflation in the 19-nation eurozone to be weaker than previously forecast this year and next, according to an ECB survey published Thursday.

The results underscore the ECB’s challenge in meeting its inflation target as the region’s economy softens.

The ECB on Wednesday left its key interest rates unchanged but President Mario Draghi signaled policy makers could take fresh action to stimulate the economy if the outlook darkens. The eurozone’s inflation rate fell to 1.4% in March, some way from the ECB’s target of just below 2%.

Experts responding to a quarterly ECB survey said that consumer price growth this year would likely be 1.4%, below the 1.5% they forecast in January. Inflation is expected to rise gradually to 1.5% next year and 1.6% in 2021, both 0.1 percentage points lower than in the previous set of forecasts.

“Many forecasters identified the weaker growth outlook as well as downward surprises to their forecasts for inflation in January and February as factors driving their downward inflation revisions, despite the higher oil price,” the survey said.

Longer-term inflation expectations were stable at 1.8%.

Survey respondents also cut their outlook for economic growth for this year and next. They see growth in economic output at 1.2% this year compared with 1.5% seen in January. For next year, they forecast 1.4% growth versus 1.5% previously seen, while for 2021 the forecast is also 1.4%.

Mr. Draghi said Thursday that Europe’s economic slowdown would continue this year, in part because of the uncertainty facing businesses as a result of U.S. threats to raise tariffs on automobiles and other imports from Europe.

“Perceptions of overall uncertainty remained high, with the balance of risks remaining to the downside,” the survey said.

The survey is conducted quarterly and its participants are experts affiliated with institutions within the European Union. The survey doesn’t represent the views of the ECB. This survey had 56 responses.
Source: Dow Jones

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