FRANKFURT (Reuters) -Euro zone consumers raised their inflation expectations for the coming years in March, before the U.S. imposed tariffs on most nations, launching a global trade war that could sap economic growth, a European Central Bank survey showed on Tuesday.
Inflation over the next 12 months was seen at 2.9%, up from 2.6% in the previous month’s survey. The three-years-ahead figure rose to 2.5% from 2.4%, the ECB said based on a survey of 19,000 consumers in 11 euro zone nations.
While such a rise would normally worry the ECB, the figures predate the U.S. tariffs, which have fundamentally changed the global economic outlook.
The euro has strengthened, energy prices have fallen and economic growth is likely to be weaker, factors that are all likely to lower price growth. In addition, China, facing reduced access to the U.S. market, could also dump cheap goods on Europe, lowering inflation further.
The outlook has changed so much that the ECB cut interest rates again in April, warning about weak growth. Some policymakers even see a risk the ECB will again undershoot its 2% inflation target.
The changes are also unlikely to be temporary and the world is facing a profound shift in how nations interact economically, financially and diplomatically, the ECB has argued.
(Reporting by Balazs Koranyi; Editing by Aidan Lewis)
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