Vetted by NeuralPress's Multi-Agent Verifier for strict factual validity and event relevance. Our compliance engine cross-checks and filters search results to ensure zero false correlations or misleading content.
Projected Eurozone Inflation (2026-2030)
ECB survey projections showing the temporary spike and stabilization of inflation.
Primary Sources
THE ECB FACING THE RETURN OF THE INFLATION SHOCK
The European Central Bank’s Survey of Professional Forecasters for the second quarter of 2026 delivers a clear message. The euro area is not tipping into a new lasting inflationary crisis. Nor is it returning to the monetary tranquillity hoped for after the years of energy tension, interest-rate increases and fragile growth. It is entering a narrower, more nervous, more political zone. Inflation is rising again in the short term. Growth is slowing. Unemployment remains contained. Long-term expectations remain close to 2%. The shock from the Middle East is weighing on energy, costs, margins and confidence. But forecasters do not see, at this stage, a spiral comparable to the one opened by Russia’s invasion of Ukraine in 2022. This diagnosis deserves attention. It speaks both to the strength and the vulnerability of the European economy. Strength, because inflation expectations remain anchored. Vulnerability, because the slightest geopolitical shock immediately reawakens the continent’s energy, industrial and commercial fragilities. INFLATION REVISED UPWARDS IN THE SHORT TERM The most visible revision concerns headline inflation, measured by the Harmonised Index of Consumer Prices. Forecasters surveyed by the ECB now expect inflation of 2.7% in 2026, compared with 1.8% in the previous survey. The gap is massive. It reflects the direct effect of the war in the Middle East on energy prices, oil, gas and supply chains. Inflation would then return to 2.1% in 2027, then to 2.0% in 2028 and 2030. The central message can therefore be summed up in one sentence: the shock is serious, but it is still considered temporary. Forecasters do not conclude that the inflation regime is drifting durably. They see a bump, not a slope. Underlying inflation, excluding energy and food, follows the same logic with less intensity. It would reach 2.2% in 2026 and 2027, then 2.1% in 2028 and 2.0% in 2030. This progression shows that the energy shock is partly spreading to services, transport, intermediate costs and wages. But this diffusion remains limited. It is not enough to disanchor expectations. This distinction is decisive. Temporary energy inflation does not call for the same response as persistent wage inflation. The ECB will therefore have to read the figures with precision. It will have to separate noise from signal. It will have to avoid two symmetrical errors: tightening too quickly and breaking already weak growth, or remaining too cautious and allowing expectation...
Daily: Bond yields should fall despite inflation risks | UBS Global
Global government bond yields rose at the start of the week after escalating hostilities in the Middle East drove oil prices higher. The US military reported that it had destroyed six Iranian small boats and intercepted Iranian cruise missiles and drones as part of its efforts to open a passage through the Strait of Hormuz.US Treasury yields rose across the curve on Monday, with the 30-year yield settling above 5% for the first time since July last year, and the 2-year yield moving 7 basis points higher. Benchmark government bond yields in euros and sterling have also risen this week.Higher-for-longer oil prices and the risk of inflation weighed on sovereign debt, especially after major central banks sounded a hawkish tone last week. Futures pricing now expects no interest rate cuts from the Federal Reserve this year and a 70% probability of a rate hike in 2027. About three 25-basis-point rate hikes are also priced in for the European Central Bank (ECB) and the Bank of England (BoE) over the next 12 months.But while persistently elevated energy prices remain a significant tail risk, we continue to believe that major central banks are likely to look through supply shocks such as the current spike in oil prices. As long-term inflation expectations remain anchored globally, a repricing of market expectations should lead to declines in government bond yields in the coming months.The Fed has room to ease further. While three regional Fed presidents voted to remove the easing bias in the central bank’s statement, Chair Jerome Powell said no one on the committee was calling for interest rate hikes. We continue to expect sequential core goods inflation to soften further in the coming months, and our base case calls for lower oil prices toward the end of the year. Oil-related economic headwinds should also slow overall growth in the second half of the year. Additionally, with incoming Chair Kevin Warsh viewing AI as a structurally disinflationary force and favoring a range for the central bank’s inflation target instead of a fixed number, we continue to expect further easing from the Fed later this year.Growth risks should keep the ECB on hold. We acknowledge the real possibility of near-term rate hikes by the ECB, as the risks of second-round inflation effects increases the longer that the Middle East conflict persists. But growth in the region disappointed in the first quarter, and recent PMI and consumer sentiment surveys suggest that a period of sub-par growth ...
A KISS for central bank communication in times of high inflation
The ECB, which targets an annual inflation rate of 2% over the medium term, is a case in point. As illustrated by Fig. 1, euro area inflation peaked at more ...
The ECB Survey of Professional Forecasters - Second quarter of 2026
In the ECB's Survey of Professional Forecasters (SPF) for the second quarter of 2026, headline HICP inflation expectations were markedly revised upwards from ...
