In the context of rising energy prices and supply chain bottlenecks, companies Eurozone inflation expectations hit the highest levels in seven years at 2.0509% on Tuesday.
After several months of high inflation readings in the eurozone, inflation expectations among bond investors from the old continent have exceeded the European Central Bank (ECB) target of 2%.
However, ECB policy makers continue to downplay concerns about rising inflation, as this week continues to focus on the central bank’s plan to withdraw pandemic support measures.
ING Bank analysts note that “rising inflation swaps will be a key topic at Thursday’s European Central Bank meeting. Lingering fear of inflation is driving expectations toward tighter policies, and any pullbacks of the ECB may remain towards initial pricing. “
Across the Atlantic, “US inflation expectations, measured by the 10-year equilibrium inflation rate based on data from the St. Louis Federal Reserve, jumped to the highest levels last seen during August 2006 at the end of Monday’s US trade, “explains Anil Panchal, analyst at FXStreet.