This morning the ECB published the results of the latest survey among professional market observers on the economic and inflation development in the euro zone. According to the Survey of Professional Forecasters (SPF), the economic outlook for the euro zone has brightened somewhat for this year and next. Nevertheless, market observers are slightly more sceptical about the 2020 time horizon. Overall, the SPF survey results indicate that the economy in the euro zone will lose momentum somewhat in the coming years, but will remain solid. The ECB monetary officials will probably be pleased to note this since it also largely concurs with their expectations which are reflected in the ECB’s projections.
As regards the inflation outlook, the SPF survey signals a gradual rise in inflationary pressure in the years ahead. However, market observers expect the upward inflation curve to be somewhat flatter than in the previous survey (January). The inflation outlook for the time horizons 2019 and 2020 have therefore been lowered by 0.1 percentage points respectively. With the inflation rate estimated to lie at 1.7% in 2020, the HICP is still keeping a degree of distance to the ECB’s target of 2%. An interesting point to note is that the professional market observers expect inflation to steadily head upwards while the ECB’s projections only point to a stronger surge in prices for the 2020 time horizon.
In the summer months, the central bank can be expected to set a new monetary course. The latest SPF survey is likely to encourage the hawks in the ECB Governing Council to press hard for a reduction in the stimulus. Despite the existence of geopolitical risks, this decision cannot be indefinitely postponed.