Market Analysis

Consumers in the Eurozone have lowered their inflation expectations for the next year to the lowest level seen in three years, according to a European Central Bank (ECB) poll released on Friday. This shift indicates that the ECB is making progress in its efforts to control rising prices.

The Consumer Expectations Survey reflects households' confidence in the ECB's ability to achieve its inflation target of 2%, which may impact their spending, saving, and wage negotiation behaviors.

In the August survey, the median respondent anticipated a 2.7% price increase over the next 12 months, marking the slowest expected growth since September 2021, down from 2.8% in July.

Additionally, consumers adjusted their expectations for inflation over the next three years from 2.4% to 2.3%, the lowest since June.

Earlier this month, the ECB reduced borrowing costs, following an initial cut in June, due to weaker growth forecasts and the expectation of a continued, though uneven, decline in inflation over the upcoming year.

Dovish members of the eurozone central bank are gearing up to advocate for another rate cut in October, following a series of disappointing economic data. However, this proposal is expected to face opposition from more hawkish colleagues, according to sources reported by Reuters.

Paraphrasing text from "Reuters" all rights reserved by the original author.