Eurozone inflation to overshoot ECB's 2% target next year - Reuters poll

The latest Reuters poll of economists showed that Eurozone inflation will continue to march higher, consistently overshooting European Central Bank’s (ECB) 2% price target next year.

Key findings

Eurozone inflation was forecast to average 2.2% next year after rising to 2.4% this year versus 1.8% and 2.3% predicted in October.

On a quarterly basis, inflation was predicted to average 4.1% and 3.1% this quarter and next.

The ECB is forecast to keep its key interest rates on hold through to end-2023 at least, with the deposit rate at -0.50% and its refinancing rate at zero.

A smaller sample of economists in the Nov. 8-11 poll willing to look beyond end-2023 showed a deposit rate hike to -0.25% the following year.

Eurozone GDP will reach its pre-COVID-19 level this quarter, according to over 85% of respondents.

The ECB’s Asset Purchase Programme (APP), currently set at 20 billion euros per month, is set to rise to 40 billion after the Pandemic Emergency Purchase Programme ends on March 31. The highest forecast in the poll was 60 billion euros.

Nearly 70% of economists, 16 of 23, who responded to another question said the APP would finish by the end-2023. The rest said it would end in 2024.

Read: EUR/USD: Options market turns most bearish in six weeks