The European Central Bank released its Survey of Professional Forecasters (SPF) where respondents revised down their inflation and GDP growth expectations for 2017-2018. Expectations for 2018 were unchanged.
Respondents said inflation would come in at 0.3% this year versus the previous estimate of 0.7%. Average inflation expectations for 2017 were 1.3% compared to 1.4% previously. Inflation expectations for 2018 were unchanged at 1.8%.
The ECB left its benchmark refinancing rate on hold at a record low of zero at its April meeting. The deposit rate remained at -0.4%, and the marginal lending rate stayed at 0.25%. In general, the regulator’s steps were in line with experts’ anticipations.
The asset purchase program was kept at €80 billion a month. Long-term inflation expectations have been unchanged at 1.8%.
At a press conference Mario Draghi said that eurozone could witness deflation in the near future, but in the second half of the year consumer prices are expected to rise. Inflation is seen to continue rising in 2017-2018, Draghi added.
Respondents to the ECB’s SPF also revised downwards real GDP growth expectations for 2016 and 2017. The rate of economic growth is forecast to increase to 1.5% in 2016, not to 1.7% as previously estimated. In 2017 the economic growth is seen at 1.6%, not at 1.8% as expected earlier. GDP growth expectations for 2018 are unchanged at 1.7%.
