The latest Survey of Professional Forecasters (SPF) showed that respondents revised down their expectations for headline inflation as measured in terms of the Harmonised Index of Consumer Prices (HICP). This downgrade was consistent with the findings of a separate survey of the ECB's contacts with corporations. Overall, a recent survey is likely bolstering bets for ECB interest rate cuts starting this spring.
Headline HICP inflation was expected to decline from 2.4% in 2024 to 2.0% in both 2025 and 2026. Expectations for 2024 were revised down by 0.3% and those for 2025 by 0.1%.
The downward revisions reportedly reflected the impact of lower than previously expected HICP data outturns and oil prices as well as weaker economic activity.
Core HICP inflation was also revised down for 2024 and 2025.
Longer-term expectations for headline HICP inflation were revised down to 2.0%.
Respondents expected GDP growth of 0.6% in 2024, 1.3% in 2025 and 1.4% in 2026.
The expectations for 2024 and 2025 were revised down by 0.3% and 0.2% respectively.
Respondents expected a slight contraction in real GDP in the final quarter of 2023, followed by a slow recovery of economic activity throughout 2024.
Longer-term growth expectations remained unchanged at 1.3%.
Expectations for the unemployment rate were largely unchanged over the entire horizon.
Respondents continued to expect the unemployment rate to increase to 6.7% in 2024 but to decline gradually thereafter to 6.5% in 2026 and in the longer term.