In ECB’s Consumer Expectations Survey, consumers’ mean perceived inflation over the past 12 months increased markedly from May’s 8.2% to June’s 8.6%. Median inflation perceptions over the previous 12 months rose from 6.6% to 7.2%.

Mean inflation expectations for 12 month ahead rose from 6.3% to 6.6%. Median inflation expectations for 12 months ahead rose from 4.9% to 5.0%.

Mean economic growth expectations for the next 12 months dropped from -1.0% to -1.3%. Median economic growth expectations was unchanged at 0%.

Full release here.

ECB Governing Council member Mario Centeno was asked yesterday about whether the central bank should hike by less that 75bps in December. He said, “I think there are conditions in place — many conditions — for the increase to be less than that number”.

Centeno also noted that “rates in Europe continue to be roughly half those in the United States”, and that’s a good indicator of the difference between the economic fundamentals of the two regions. He also urged restraint in wage growth and company margins as that “could help the ECB a lot in combating inflation”.

In a newspaper interview published on Sunday, ECB Governing Council member Pablo Hernandez de Cos spotlighted the upcoming economic projections in March as a crucial factor in determining the timing for interest rate cuts.

De Cos outlined two primary considerations that the March projections will address: the confidence level in achieving ECB’s 2% medium-term inflation target and the determination of an interest rate path that aligns with reaching this symmetric target.

Reflecting on past challenges, de Cos acknowledged the ECB’s initial underestimation of the inflationary surge post-pandemic and following Russia’s invasion of Ukraine.
However, he noted a marked improvement in the accuracy of staff projections, highlighting recent instances where inflation figures came in slightly below expectations.

De Cos’s remarks suggest a positive outlook on Eurozone’s disinflation process, describing it as “well advanced” and likely “to continue in the coming quarters.”

ECB chief economist Philip Lane said in an interview that Eurozone is “very much at an inflection point”. Looking backwards, the initial weeks of this year “have been very tough” for many businesses. But looking forward, “there will be a rebound” from the worst, even though it’s not a “full recovery” yet.

Q1 will have seen a “slight contraction”. But the economy “will be growing in May and in June, and even more strongly in the third quarter between July and September, with that momentum continuing into the autumn,” he added. ” If you take the whole year, 2021 together, we do think activity will be about 4 per cent above 2020 values. That doesn’t quite recover all of the losses from 2020, but it’s significant progress compared with where we are now.”

Full interview here.