Europeans Warn ECB About Fears of Rising Prices, Economic Slump

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The European Central Bank faces a toxic mix of surging inflation expectations, the prospect of a shrinking economy and a worsening labor market, according to the citizens it serves, Bloomberg News reported. That’s the thrust of a new monthly poll of euro-zone households, the Consumer Expectations Survey, which is intended to gauge on-the-ground views to support policy makers in their decision making. It highlights the challenge as they weigh how fast to raise interest rates. Consumers’ median expectation for inflation 12 months ahead rose to 5% in June, according to the inaugural report released on Thursday. An estimate for price growth in three years climbed 0.3 point to 2.8% -- significantly above the ECB’s 2% target. Meanwhile, the economy is seen contracting 1.3% in a year’s time, with unemployment reaching 11.5%. That might be ominous for consumption, which has supported growth so far as factories endure supply-chain disruptions, labor shortages and surging costs. The ECB itself isn’t currently forecasting a recession, and its latest projections from June show joblessness consistently below 7% through 2024. Officials lifted rates by half a point in July, ending an eight-year experiment with negative borrowing costs, and flagged more increases to come. Read more.