Ekonomické zprávy
26.10.2021

Eurozone inflation expectations at new seven-year high

Reuters reports that euro zone inflation expectations among bond investors opened at a new seven-year high, shooting past the ECB's target on the back of soaring oil prices and supply chain crunches across the world.

An important market gauge of long term euro zone inflation expectations, the five-year, five-year forward inflation swap, opened on Tuesday at 2.0284%, its highest since September 2014 and higher than the ECB target of 2%.

"Rising inflation swaps will be a key topic at Thursday's ECB meeting," analysts at ING wrote in a note. "The persistent inflation scare is seeing expectations tilt towards tighter policies, and any pushback by the ECB may remain confined to the very front-end pricing."

Euro zone government bonds yields, while relatively unchanged on Tuesday, have risen sharply in recent weeks with persistently higher consumer prices leaving investors with little choice but to price in tighter policy.

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