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Investing.com -- Euro zone inflation is expected to be lower this year and next than previously forecast, according to the European Central Bank’s Survey of Professional Forecasters released on Friday.
The survey, which serves as a key input in policy deliberations, shows inflation is now projected to average 2% in 2025, down from the 2.2% predicted three months ago. For 2026, inflation is expected to slow further to 1.8%, below the previous forecast of 2%.
Inflation has declined rapidly over recent years and currently hovers around the ECB’s 2% target. This was a significant factor in the central bank’s decision to leave interest rates unchanged on Thursday, while also indicating it was not rushing to implement further rate cuts.
The ECB has already reduced its main interest rate to 2% from 4% since June 2024, cutting the rate by half.
According to the survey, tariffs are expected to have a minor downward impact on inflation in the near term but should be "broadly neutral on balance in 2027 and over the longer-term horizon."
The survey also indicates that inflation will remain around the ECB’s 2% target in the longer term.
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