Euro-Zone Inflation Seen Just Below 2% in 2025, ECB Poll Shows

The European Central Bank will see inflation dip just below its target next year, according to its quarterly survey of professional forecasters.

(Bloomberg) — The European Central Bank will see inflation dip just below its target next year, according to its quarterly survey of professional forecasters.

Consumer prices will rise 1.9% in 2025, down from a previous forecast of 2%, a release on Friday showed. The projections for 2024 and 2026 were unchanged at 2.4% and 1.9%.

Longer-term expectations for headline and core inflation also held steady at 2% each.

The ECB on Thursday lowered interest rates for the third time this year, delivering back-to-back cuts as the euro-zone economy struggles. In light of the weakening backdrop, markets have been stepping up bets on reductions in the deposit rate.

A separate ECB poll found that non-financial companies reported “a further moderation in price growth overall” and continued to expect a gradual easing of wage increases next year. 

The employment outlook was judged to be subdued, with parts of the manufacturing sector “restructuring in response to weak demand and/or rising wage costs.” But the aggregate effect was expected to be muted as services employment keeps growing and some industrial firms still report staff shortages.

Respondents in the September survey said they “did not anticipate much change to the overall subdued growth dynamic in the short term” — a contrast to the rising optimism exhibited previously. A recovery in consumer spending was now only expected in 2025.

Other findings from the ECB’s SPF:

• Forecasters expect core inflation — excluding energy, food, alcohol and tobacco — of 2.8% this year vs. 2.7% before

  • Projections for 2025, 2026 unchanged at 2.2% and 2%
• Economic growth still seen this year at 0.7%, though the outlook for 2025 worsened to 1.2% from 1.3%
• Forecasters still see unemployment at 6.5% this year, and expect it to even out at 6.4% in the long term
• The ECB’s Oct. 1-3 poll includes 56 responses