Inflation expectations of eurozone consumers reached its year-high

Inflation expectations of eurozone residents, according to the monthly survey of the European Central Bank (ECB), increased significantly in March. Respondents forecast an acceleration in price growth to 2.9% in the next 12 months. This reading of the indicator became the highest since April of the previous year.

Meanwhile, three-year expectations showed a slight increase to 2.5%, while five-year expectations, first published by the ECB, stood at 2.1%. The forecasts were revised upwards despite the regulator's plans to continue cutting interest rates after its seventh cut this month. 

Earlier, the head of the ECB Christine Lagarde, analyzing the current situation, noted that the process of achieving the inflation target of 2% is at the final stage. Francois Villeroy de Galhau, representing France, also emphasized the absence of inflation risks in Europe.

In addition, the ECB survey shown that citizens expect the economy to contract by 1.2% in the coming year. This value has not changed compared to the February figure. At the same time, the projected unemployment rate decreased to 10.4%, and expectations for nominal income growth remained at 1%.