Market Analysis

Economists anticipate that inflation rates will remain above the European Central Bank's (ECB) 2% target in the medium term, as highlighted in a survey released by Germany's Ifo institute on Wednesday. This comes just a day ahead of the ECB’s upcoming monetary policy meeting.

The survey, conducted quarterly by Ifo in collaboration with the Swiss Economic Policy Institute, projects inflation in the eurozone to reach 2.6% this year. In specific countries, inflation is expected to hit 2.4% in Germany, 3.1% in Austria, and 2.3% in France, according to Ifo.

"Inflation is likely to stay above the ECB's 2% target in the medium term," said Ifo researcher Niklas Potrafke, noting that "these persistently high inflation expectations could lead central banks to be cautious about further interest rate reductions."

Despite this outlook, the ECB is expected to implement another interest rate cut this week, with ECB President Christine Lagarde indicating that the decision would reflect the bank’s confidence in inflation easing.

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