inflation in the euro zone is expected to have fallen to 1.4% in May – The Economic Journal

Eurozone inflation is expected to ease in May, below the 2% target of the European Central Bank (ECB) on Thursday. The Consumer Price Index should have been set at 1.4% in May, retreating from the five-month highs recorded in April, according to the estimates of the Global Investment Bank (BIG) analysts.

The data are released the same week that the ECB meets, and the Board of Governors is expected to update the economic projections for the euro zone.

Inflation in the euro zone in April was set at 1.7% in April, according to Eurostat data. On the other hand, underlying inflation, ie inflation excluding energy products and unprocessed food, accelerated to 1.3% in April and analysts' estimates are expected to have been set at 1% in May.

"The European Central Bank's decision on interest rates will get a lot of attention on Thursday, with inflation continuing to remain below the ECB's 2% target and with market-based inflation expectations continuing "says Stefan Scheurer, director of global capital markets at Allianz Global Investors.

The ECB has revised downward inflation projections for this year at the March meeting. By 2019, the central bank expects inflation to reach 1.2%, compared to the 1.6% forecast in December, while next year the HICP index should rise by 1.5% and 1.6% in 2021.

"Compared to the projections for December, the outlook for inflation has been revised downwards over the horizon, reflecting especially the weaker outlooks on short-term economic growth, "Draghi said at the time.

At the time, the institution led by Mario Draghi also cut economic projections and now expects the economy of the single currency to grow 1.1% this year (compared to the 1.7% expected in December) and 1.6% in 2020, which also compares with the previous forecast of 1.7%. For 2021, the projection is of a growth of 1.5%.

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