Forecasters see steady inflation and slower growth
The European Central Bank published its Survey of Professional Forecasters for the third quarter of 2026 on July 24. Respondents kept headline inflation expectations unchanged while revising down economic growth forecasts.
Steady price pressures, cooling growth
Respondents to the European Central Bank Survey of Professional Forecasters for the third quarter of 2026 pegged headline inflation at 2.7 percent for 2026, 2.2 percent for 2027, and 2.0 percent for 2028.
These projections remained unchanged for 2026 and 2028, while the 2027 outlook edged up by 0.1 percentage points.
Core inflation expectations for 2026 rose 0.2 points to 2.4 percent, aligning closer to Eurosystem staff projections.
Meanwhile, real GDP growth expectations were downgraded by 0.4 percentage points to 0.6 percent for 2026 and by 0.1 points to 1.2 percent for 2027.
Unemployment rate projections ticked slightly higher to 6.3 percent for 2026 and 2027 before declining to 6.2 percent in 2028, reflecting a more cautious macroeconomic outlook among the fifty-three surveyed experts.
Middle East war risks and survey scope
The survey, conducted between July 1 and July 6, 2026, gathered responses from fifty-three European financial and non-financial institution experts.
A special inquiry into the war in the Middle East indicated that indirect and second-round effects are expected to be limited and concentrated primarily in 2026.
Forecasters judged the balance of risks to inflation as slightly tilted to the upside for 2026, turning more balanced thereafter.
Longer-term expectations for 2031 remained anchored at 2.0 percent for both headline and core inflation.
Stubborn inflation meets sluggish growth
The survey results reveal a persistent divergence between sticky inflation and an anaemic euro area recovery.
While price pressures anchor near target, sharp growth downgrades underscore mounting economic fragility.
This dynamic leaves policymakers facing a delicate balancing act.