FRANKFURT (Reuters) -Euro zone households increased their inflation expectations in November, a European Central Bank poll showed on Tuesday, suggesting years of high inflation were still weighing on households’ psychology.
The ECB has been steadily cutting interest rates after bringing down price growth to just above its 2% target but some of the latest indicators, including German inflation data on Monday, suggest the battle might not be over just yet.
The median respondent in the ECB’s Consumer Expectations Survey expected prices to grow by 2.6% over the following 12 months in November, from 2.5% in October – marking the second increase in a row.
The expectation for three years ahead was raised to 2.4% – the highest level since July – from 2.1%.
The ECB has considered such levels as being “around” its 2% target before, so this latest survey alone is unlikely to change its intention to keep reducing borrowing costs.
But investors have become less confident that the central bank will manage to cut rates four times by June.
Inflation data for the euro zone is due to be published at 1000 GMT.
(Reporting by Francesco Canepa, editing by Ed Osmond, Kirsten Donovan)
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