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2025-10-31 17:05:04
[ECB's "Reassurance" Fails? Market Undercurrents Behind Inflation Target Achievement] ⑴ The European Central Bank (ECB) emphasized that inflation remains close to its medium-term target of 2%, and its assessment of the inflation outlook remains largely unchanged. ⑵ The Governing Council did not pre-commit to a specific interest rate path, but is determined to ensure that inflation stabilizes at the 2% target level over the medium term. ⑶ Despite a challenging global environment, the Eurozone economy continues to grow, with a robust labor market, a strong private sector balance sheet, and past interest rate cuts being important sources of resilience. ⑷ However, the economic outlook remains uncertain, mainly due to ongoing global trade disputes and geopolitical tensions, particularly market concerns triggered by Trump's tariff rhetoric. ⑸ The ECB will follow a data-dependent and meeting-by-meeting approach to determine the appropriate monetary policy stance. ⑹ According to the ECB's professional forecasters survey released on Friday, Eurozone inflation is expected to be 1.8% in 2026 and 2.0% in 2027, both forecasts unchanged from three months ago. (7) Surveys show that long-term inflation expectations remain stable at 2.0%, with GDP growth projected at 1.1% in 2026 and 1.4% in 2027; these forecasts remain unchanged. (8) Institutional reports indicate that Eurozone inflation will remain near the central bank's 2% target in the coming years, while economic growth is expected to slowly recover to its potential level. (9) At its meeting on Thursday, the European Central Bank kept interest rates unchanged for the third consecutive time, believing that the inflation outlook remains largely unchanged, with price growth fluctuating around 2% and likely to remain near that level in the coming years. (10) Internal forecasts from the European Central Bank show that the inflation rate in October (to be released at 18:00 Beijing time on Friday) is expected to decline slightly to 2.1% from 2.2% a month ago, then fall to 1.6% in early 2026, before slowly recovering to 2% by mid-2027.
