Eurozone: Market-based inflation expectations remain very low – Danske Bank

Research Team at Danske Bank, notes that at the latest ECB meeting, the divergence between market- and survey-based inflation expectations was strongly emphasised.

Key Quotes

“According to the ECB, the significant fall in market-based inflation expectations following the Brexit vote was caused by technical factors (a larger impact on nominal bond yields versus linkers).

Market-based inflation expectations have not recovered despite the improved market sentiment and higher oil price.

However, as long as survey-based inflation expectations remain stable, the ECB seems willing to accept the low market-based inflation expectations.”