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Euro-area forecasters raise near-term inflation estimates

Professional forecasters surveyed by the European Central Bank raised their euro-area inflation estimates for 2026 and 2027, citing energy prices. They still expected inflation to reach 2.0 per cent in 2028. Longer-term expectations held steady, while respondents saw downside risks to economic growth across the forecast horizon.

Economics & Markets··Morning
A wide view of anonymous professional forecasters discussing around a long table in a bright European financial institution office.

Near-term forecasts move upward

The European Central Bank’s fourth-quarter Survey of Professional Forecasters, published on October 30, showed higher inflation expectations for the euro area in 2026 and 2027. Respondents still placed the return to the bank’s inflation target in 2028. These are forecasts by surveyed experts rather than a new policy decision or measured inflation results.[1], [2]

Inflation was projected at 3.0 per cent in 2026 and 2.6 per cent in 2027, both higher than in the preceding survey. The 2028 estimate stayed at 2.0 per cent. Longer-term expectations for 2031 also remained at 2.0 per cent.[1]

Energy shock raises inflation risks

Respondents linked the revisions mainly to higher energy prices and indirect effects. A special question about the Middle East war placed additional energy-shock effects chiefly in 2027, with limited second-round effects. Inflation risks were judged upward through 2028 and more balanced later. Forecast wage growth slowed from 3.3 per cent in 2026 to 2.8 per cent in 2028.[1]

Growth faces downside risks

Real economic growth was forecast at 1.0 per cent in 2026 and 1.3 per cent in both 2027 and 2028, with downside risks across all horizons. The survey collected 52 responses between October 2 and 7 from experts at financial and non-financial institutions in Europe. Their views do not represent the central bank’s staff or decision-making bodies.[1]

References

  1. News sourceEuropean Central BankEuro-area forecasters raise near-term inflation expectations↩1↩2↩3↩4
  2. News sourceReutersEuro-area inflation forecasts rise for this year and next↩
Russia-Ukraine warCentral banks and the rate cycleEnergy transition and climate

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