Euro zone inflation expectations ease in May

Euro zone consumers cut their near term inflation expectations in May and kept them steady for longer ​horizons, a European Central Bank survey showed on Friday, ‌suggesting that the bank is not under pressure to quickly raise interest rates again.

The ECB raised its deposit rate earlier this month to ​combat surging inflation and some policymakers have said that more policy ​tightening is needed to temper price expectations, but the ⁠debate over the timing of any further move is ​wide open.

Consumers cut their price growth expectation for the next ​year to 3.5% in May from 4.0% a month earlier while expectations for three and five years ahead were steady at 2.9% and 2.4% ​respectively, the ECB said in its Consumer Expectations Survey.

"Uncertainty ​about inflation expectations over the next 12 months decreased but remained at ‌a ⁠higher level than before the start of the war in the Middle East," the bank said based on its survey of 19,000 adults in 11 euro zone nations.

As usual, consumers ​in lower-income ​groups reported ⁠higher inflation perceptions and expectations while younger people reported lower inflation perceptions and expectations.

Financial markets are ​pricing between one and two more rate ​hikes and ⁠the next move is not fully priced in until the autumn.

Consumer also turned less pessimistic about growth prospects, predicting overall ⁠growth of minus 1.7% ​in the year ahead after seeing ​a 2.2% contraction a month earlier.

Income expectations also rose slightly but bets on ​unemployment also increased.

-Reuters