MNI BRIEF: Lower Inflation Expectations Bright Spot For ECB

Expectations for euro area inflation over the next 12 month and 3-year horizons have fallen, according the European Central Bank's latest Consumer Expectations Survey, while expectations for nominal income growth over the next year continued to rise.

Consumers' median expectations for inflation over the next 12 months edged down to 4.9% from 5.0% in January, the survey showed while median expectations for inflation three years ahead declined significantly to 2.5%, from 3.0% in the previous month.

Inflation expectations remained well below the perceived past inflation rate, particularly at the horizon of three years, the ECB's survey shows. Uncertainty about inflation expectations 12 months ahead edged up but remained broadly in line with the elevated levels observed since March 2022.