An ECB consumer survey released Friday showed euro-area one-year inflation
expectations fell to 3.5% in May from 4.0% in April, while three-year and
five-year expectations remained at 2.9% and 2.4% respectively. The survey
covered about 19,000 adults across 11 countries. The ECB said uncertainty around
12-month expectations declined but remains above pre–Middle East war levels.
Some ECB policymakers still favour further tightening to rein in inflation
expectations, but there is wide internal disagreement over timing. Low-income
households report higher current inflation perceptions and expectations; younger
respondents report relatively lower levels. Financial markets price roughly one
to two more ECB hikes, with the next move broadly expected to be fully priced in
by autumn.
