A key market gauge of eurozone long-term inflation expectations topped 2.40% on Wednesday, heading to a 10-year high after a higher-than-expected reading on UK consumer prices. Kingdom added to signs of persistent cost pressures.
The euro zone’s five- and five-year forward inflation swap was at its highest level since 2012, according to data from the European Central Bank, and well above the monetary authority’s 2% target, which meets on Thursday (14 ).
“This will definitely be testing your (the ECB’s) resolve and your stance. It’s definitely a problem. There are many arguments they have made to downplay the importance of this indicator,” said Antoine Bouvet, senior rate strategist at ING.
The indicator was around 2.20% before Russia’s invasion of Ukraine and around 2% at the beginning of the year.
“This shows at least one thing – there are concerns that inflation is out of control,” added Bouvet, although he said that risk was small and not a widely accepted view.
A Reuters poll last week showed that economists still expect eurozone inflation, which hit 7.5% in March, to peak this quarter.
Data on Wednesday showed British inflation picked up to 7.0% in March from a year earlier, from 6.2% in February, the highest rate since March 1992 and more than most economists had expected.
Source: CNN Brasil
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