Euro area inflation expectations unchanged, GDP growth revised up for 2026
The European Central Bank's Survey of Professional Forecasters (SPF) for the first quarter of 2026 indicates stable inflation expectations across all horizons. Forecasters slightly revised upwards their real GDP growth projection for 2026, while longer-term unemployment expectations saw a marginal downward adjustment.
Inflation outlook remains anchored
Participants in the Q1 2026 SPF anticipate Harmonised Index of Consumer Prices (HICP) inflation of 1.8 percent for 2026, 2.0 percent for 2027, and 2.1 percent for 2028. Expectations for 2026 and 2027 remained unchanged compared to the Q4 2025 survey, with 2028 being a new horizon.
Core HICP inflation, which excludes energy and food, was expected to be 2.0 percent across all horizons, also unchanged from the previous survey round.
Longer-term expectations for both headline and core inflation (for 2030) remained at 2.0 percent, consistent with previous findings.
This stability suggests forecasters maintain confidence in the medium-term price stability outlook.
Growth forecast nudged up by statistical effect
Real GDP growth is projected at 1.2 percent for 2026, 1.4 percent for 2027, and 1.3 percent for 2028. The 2026 growth expectation was revised upwards by 0.1 percentage points compared to the previous survey, while the 2027 forecast remained unchanged.
This upward revision for 2026 was primarily attributed to a statistical overhang resulting from unexpectedly strong GDP data for the third quarter of 2025. Longer-term growth expectations remained stable at 1.3 percent.
Unemployment rate expectations for 2026 and 2027 held steady at 6.3 percent and 6.2 percent respectively, with a slight downward revision for the longer term (2030) to 6.1 percent.
A steady course, but with caveats
The consistent inflation expectations across all horizons offer a reassuring signal for price stability, suggesting forecasters believe the ECB's target is within reach.
However, the upward revision to 2026 GDP growth, driven by a statistical overhang, implies underlying economic momentum might be less robust than headline figures suggest.
This SPF reinforces the current narrative, offering little new impetus for significant policy shifts.