Euro zone consumers raise near-term inflation expectations, ECB survey shows
FRANKFURT, May 28 (Reuters) - Euro zone consumers raised their inflation expectations in April but kept a steady view on price growth further out, highlighting elevated uncertainty amid a global trade war, the ECB's Consumer Expectations Survey showed on Wednesday.
Households see inflation at 3.1% over the next year, above the 2.9% predicted a month earlier and also well above the ECB's 2% own target.
That reading, however, goes counter to the ECB's own projections that price growth was set to slow given weak economic growth, muted wage increases, lower energy costs and a stronger euro.
This combination of muted price pressures along with pervasive uncertainty related to U.S. tariffs is why the ECB is all but certain to cut interest rates for the eight time in 13 months next week.
Inflation expectations three and five years out remained unchanged, the ECB said, based on a survey of 19,000 adults in 11 euro zone countries.
Consumers see price growth at 2.5% in three years and at 2.1% in five years.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Independent
21 minutes ago
- The Independent
Dutch prime minister steps down after far-right leader's shock withdrawal from coalition
The Dutch government has collapsed, with Prime Minister Dick Schoof announcing his resignation after Geert Wilders withdrew his PVV party from the right-wing coalition. The move is expected to trigger snap elections in the Netherlands. Ministers from Mr Wilders' PVV party will leave the cabinet, with the remaining ministers forming a caretaker government in the interim. Elections are unlikely to be held before October, and the formation of a new government could take months. The collapse comes amid a rise in hard-right sentiment in Europe, fuelled by anger over migration and the cost of living. This could threaten European unity in dealing with Russia and the United States. Mr Wilders said earlier on Tuesday that his party was pulling out because the other three coalition partners were not willing to support his ideas on asylum and immigration. "No signature under our asylum plans. The PVV leaves the coalition," Mr Wilders said in a post on X. The others parties in the coalition now have the option to try and proceed as a minority government, though they are not expected to. The likely outcome will be new elections in the coming months, adding to the political uncertainty in the Eurozone's fifth-largest economy. It will likely also delay a decision on a possibly historic increase in defence spending to meet new NATO targets. And it will leave the Netherlands with only a caretaker government when it receives NATO country leaders for a summit to decide on these targets in The Hague later this month. Disbelief and anger at Mr Wilders' actions Earlier, Mr Wilders' coalition partners responded with disbelief and anger after he announced his withdrawal. "This is making us look like a fool," the leader of the conservative VVD party, Dilan Yesilgoz, said. "There is a war on our continent. Instead of meeting the challenge, Wilders is showing he is not willing to take responsibility." "This is incredible," leader of the centrist NSC party Nicolien van Vroonhoven said. "It is irresponsible to take down the government at this point." Last week, Mr Wilders demanded immediate support for his proposals to completely halt asylum migration, send Syrian refugees back to their home country and to close asylum shelters. Coalition partners did not embrace his idea, and had said it was up to the migration minister from Mr Wilders' own party to work on specific proposals. Mr Wilders was not part of the government himself as its leader or a minister. He was convicted for discrimination after he insulted Moroccans at a campaign rally in 2014 and only managed to strike a coalition deal with three other conservative parties last year after he gave up his bid to become prime minister. Instead, the cabinet was led by the independent and unelected Mr Schoof, a career bureaucrat who had led the Dutch intelligence agency AIVD and was the senior official at the ministry of justice.
Reuters
26 minutes ago
- Reuters
Hedge funds lifted by stocks, stymied by bonds in May, say sources
LONDON, June 3 (Reuters) - Hedge funds made gains in May on a weaker dollar and by exploiting market dislocations following April's global trade shock but faced losses in whipsawed commodities and fixed income markets, according to sources and bank research. Stocks bounced back last month as tariff worries ebbed while bond markets sold off as worries about high debt levels in big economies such as the United States and Japan resurfaced. Hedge funds globally returned a positive monthly return of 3% as of May 29, a JPMorgan prime brokerage note sent to clients on Friday and seen by Reuters on Monday showed. Industry returns were up 5% for the year so far, the note said. Stock picking hedge funds posted a 3% performance in May, while multi-strategy hedge funds trading many different strategies under one roof returned 2.5% and quantitative equity funds using systematic strategies returned 4.2%, the note said. Singapore's $1.1 billion multi-strategy hedge fund Arrowpoint Investment Partners benefited from exploiting markets roiled by tariff shocks and sees more arbitrage opportunities ahead, its chief investment officer told Reuters. Billionaire investor Cliff Asness's $135 billion hedge fund AQR Capital Management saw gains from stock selection and corporate arbitrage in its Apex Strategy, which returned a 2.4% May return net of fees, said a source. Systematic and trend following programmes that traded in stock markets were helped by their stock holdings. AQR's Helix Strategy, which follows market trends, was flat in May but has delivered a 7% return for 2025 through the end of May, as positive returns from stocks were offset by reversals across interest rate derivatives and trades which play differences across different bond tenors, said the source. London-listed Man Group's (EMG.L), opens new tab AHL Alpha fund returned a negative 2.19% for May and is down around 11% while its multi-strat fund had a positive May and has returned around 5% so far this year, said the fund's website. Systematic funds, which have limits on how much volatility their fund can tolerate have in recent months had to ditch trades, both losing and winning, even when the uncertainty roiling markets has been temporary, said an article written by portfolio managers at Man Group's AHL strategy in April.
Reuters
36 minutes ago
- Reuters
Russia's economy minister calls for 'timely' rate cut to boost growth
MOSCOW, June 3 (Reuters) - Russia's economy minister Maxim Reshetnikov said on Tuesday that the central bank should ease monetary policy in a timely manner in order to achieve growth of 3%, a target set by President Vladimir Putin. Reshetnikov's comments came before the central bank reviews its key interest rate on June 6. A Reuters poll of 26 economists has predicted that the regulator will keep the key rate on hold at 21%. Economists expect Russian economic growth to slow to 1.5% in 2025 from 4.3% last year. The government forecasts 2.5% GDP growth this year. "The current task is to navigate the cooling-off period. We are counting on a timely easing of monetary policy to maintain the targeted 3% growth rate outlined by the president in the future," Reshetnikov said. The minister said that output was falling in an increasing number of real economy sectors while a slowdown in lending was hitting demand for engineering products, special equipment, freight transport, light commercial vehicles and buses. The central bank is under pressure from businesses to start cutting the key rate. However Governor Elvira Nabiullina has resisted the pressure, arguing that the bank needs to see a sustainable disinflationary trend before it can begin to ease rates.
