ECB professional forecasters have raised eurozone inflation expectations to 2.7% for 2026 while cutting growth forecasts to 1.0%, with energy costs from the Middle East war cited as the primary driver.
ECB professional forecasters have raised eurozone inflation expectations to 2.7% for 2026 while cutting growth forecasts to 1.0%, with energy costs from the Middle East war cited as the primary driver. Summary: The ECB’s Survey of Professional Forecasters for Q2 2026 showed headline inflation expectations revised sharply upward to 2.7% for 2026, up from a previous expectation of 1.8%, before easing to 2.1% in 2027 and 2.0% in 2028, per the ECB Core inflation, excluding energy and food, was also revised upward by 0.2 percentage points for 2026 and 2027 to 2.2%, and by 0.1 percentage points for 2028 to 2.1%, according to the ECB survey Real GDP growth expectations were cut to 1.0% for 2026 and 1.3% for 2027, representing downward revisions of 0.2 and 0.1 percentage points respectively, with the ECB attributing the cuts primarily to the drag from higher energy prices related to the Middle East conflict Longer-term inflation expectations for 2030 remained anchored at 2.0%, and unemployment forecasts were unchanged at 6.3% for 2026, easing to 6.2% in 2027 and 6.1% in 2028, per the ECB Slovak ECB policymaker Peter Kazimir said the inflation outlook remains tilted to the upside and described a June rate hike as virtually certain, citing spreading energy costs and no improvement in the Iran war situation, according to reports Bank of France Governor Francois Villeroy de Galhau urged a cautious, data-driven approach, saying the ECB needs a critical mass of evidence on core inflation, wages and expectations before committing to rate hikes, per his remarks The European Central Bank’s latest survey of professional forecasters has delivered a stark assessment of the eurozone’s near-term outlook, combining a sharp upward revision to inflation expectations with a meaningful downgrade to growth, as the economic fallout from the Middle East conflict continues to spread through energy markets and into the broader economy.
Headline inflation across the eurozone is now expected to…