Frankfurt, Germany - November 09, 2020: European Central Bank ECB, EZB headquarters at Eastend Frankfurt, Germany. The European Central Bank (ECB) is the central bank of the Eurozone. Close-up of the logo in front of the building.

The European Central Bank’s (ECB) latest survey of economists signals higher inflation expectations for this year and next, with growth forecasts unchanged.

The central bank reported that its first quarter survey of professional forecasters, carried out between Jan. 6 and 12, pointed to higher inflation, with average expectations now sitting at 5.9% for 2023 and 2.7% in 2024, up 0.1 and 0.3 percentage points, respectively, from the previous survey.

“The upward revisions reflect corresponding changes to expectations for inflation excluding energy, food, alcohol and tobacco,” the ECB said.

“According to respondents, these changes mainly reflect a combination of recent data out turns, ongoing stronger and broader than expected indirect effects of energy price developments as well as higher forecast wage growth,” it noted.

The survey’s first forecast for 2025 sees inflation at 2.1%, in line with longer-term expectations (for 2027), the ECB said.

The respondents’ GDP growth expectations were largely unchanged, it noted, with “stronger than expected economic activity in the second half of 2022 affecting 2023, but being offset by slightly weaker expectations for 2024.”

“Longer-term GDP growth expectations remained unchanged at 1.4%,” the ECB reported.

The unemployment rate is expected increase to 7.0% in 2023, before declining gradually to 6.4% by 2027.