Eurozone economic confidence rose for a second month in May as the ECB prepares to present updated economic projections that could provide further clues about the impact of its stimulus programme.
An index of executive and consumer sentiment increased to 104.7 from a revised 104.0 in April, the European Commission said yesterday.
That is the highest level seen in four months and compares to a median estimate for an increase to 104.4 in a survey.
ECB officials meeting in Vienna on Thursday are expected to keep their ultra-loose policy unchanged again after they expanded quantitative easing by a third to €80bn in March and cut the deposit rate further below zero.
Vice-president Vitor Constancio said last week that he’s optimistic the ECB will reach its inflation goal by 2018, reflecting the upgraded stimulus and rising oil prices.
“We expect both the inflation and growth projections to be revised upward; that’s going to be the focus in this week’s meeting,” said Johannes Gareis, an economist at Natixis in Frankfurt.
“The ECB will stress the importance of QE now that you can actually see some positive effects in the data,” he said.
Eurostat will likely say today that the inflation rate rose to minus 0.1% in May from minus 0.2% the previous month, and unemployment was unchanged at 10.2% in April, according to separate survey of economists.
Sentiment among consumers rose to readings of minus 7.0 from minus 9.3 the previous month, according to Monday’s report from the Commission.
Confidence in retailing and construction improved as well, while a measure for industry remained unchanged and a gauge for services declined.
In March, the ECB forecast eurozone growth of 1.4% this year, 1.7% in 2017 and 1.85 in 2018, with inflation of 0.1%, 1.3% and 1.6%, respectively.
Asked in a television interview whether he thinks consumer prices will rise faster in two years than currently predicted, Mr Constancio said he “certainly personally expects” so.
The ECB’s governing council is meeting in Vienna, one of the occasional sessions held outside its Frankfurt headquarters. It is likely to mark a pause after a fresh round of stimulus in March.
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