(Bloomberg) -- A surge in euro-area inflation back above 2% is unlikely to bother European Central Bank policymakers intent on loosening constriction for the region’s souring economy.
Consumer-price growth probably accelerated to 2.3% in November, the fastest level in four months, according to the median forecast of 36 economists surveyed by Bloomberg. An underlying measure that strips out volatile elements such as energy is also predicted to have quickened slightly to 2.8%.
While the direction of such readings due next Friday might have been a setback to officials a year or so ago, the ECB has become increasingly sanguine on inflation prospects and will probably view any re-acceleration as a short-lived blip.
The dovish Bank of Greece governor, Yannis Stournaras, even declared victory this week in taming prices, saying his colleagues might need to start fretting about the prospect of an undershoot to the 2% goal.
Donald Trump’s threat of trade tariffs for when he re-enters the White House next year might exacerbate that danger, further hitting the euro-zone economy.
Survey numbers pointing to an unexpected contraction in private-sector activity across the region prompted investors to bet on Friday that officials will ramp up interest-rate cuts with a 50 basis-point move in December.
While those indexes will inform policymakers at next month’s decision, they will also look closely at the hard data offered by the coming spate of inflation numbers, which start arriving on Thursday before the overall euro-area outcome the next day.
All four of the region’s largest economies are predicted to have seen an energy-fueled acceleration in price growth. Economists even reckon that inflation in Spain surged by 0.7 percentage point, to 2.5%.
Policymakers don’t fully agree that consumer prices are under control. Austria’s Robert Holzmann, for example, said on Thursday that “it’s not yet guaranteed that inflation will sustainably reach 2%.”
Stournaras, by contrast, reckons that officials face increasing reassurance of that prospect. He said that the goal is likely to be reached at the start of 2025, earlier than the ECB previously projected. The anticipated reading for November would already be well below the 2.6% average the quarter in those forecasts.
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