MNI BRIEF: Inflation, Growth Expectations Up - ECB Survey

Euro area short- and medium-term inflation expectations have maintained their upward trajectory, according to the latest European Central Bank Survey of Professional Forecasters, as temporary upward price pressures are overtaken by a steady increase in economic activity, with growth set to surpass pre-pandemic levels later this year.

HICP inflation expectations stood at 1.9% for 2021, up 0.3 percentage point from the second quarter survey, and rose 0.2 point to 1.5% for next year. Expected GDP growth was 0.5 point higher for both this year and next at 4.7% and 4.6%, with longer-term growth sticking at 1.4%. Growth is now predicted to beat Q4 2019 levels in Q4 2021 - a quarter earlier than suggested in last quarter's survey.

In June, Eurosystem staff said they expect inflation to spike at 1.9% in 2021, before returning to rates of 1.5% and 1.4% in 2022 and 2023. Real GDP growth was expected to reach 4.6% in 2021, 4.7% in 2022, and 2.1% in 2023. Fresh ECB growth and inflation expectations are due in September.