Results of the ECB Survey of Professional Forecasters for the fourth quarter of 2026

The ECB Survey of Professional Forecasters is a quarterly survey of expectations for the euro-area economy. It covers inflation, real GDP growth and unemployment across several time horizons. Participants also assess uncertainty and provide forecasts for factors such as interest rates, oil prices, wages and the output gap.

For the fourth quarter of 2026, the ECB received 52 responses. The participants were experts affiliated with financial and non-financial institutions based in Europe. Their forecasts help show how informed observers view the economy’s likely direction.

The results are evidence about professional expectations, not decisions made by the ECB. The article specifically states that the survey does not represent the views of the ECB’s decision-making bodies or staff. The survey was conducted between 2 and 7 October 2026, and the next Eurosystem projections are due on 18 December 2026.

Headline inflation expectations rose notably for the near term. Compared with the previous survey, the forecast increased by 0.3 percentage points for 2026 and 0.4 percentage points for 2027. The 2028 forecast did not change, suggesting that the expected shock is viewed as temporary rather than permanent.

Forecasters now expect headline inflation, measured by the HICP, to reach 3.0% in 2026. They expect it to ease to 2.6% in 2027 and 2.0% in 2028. Core inflation expectations for 2026 and 2027 were also revised upwards, although the article does not provide their exact rates.

Longer-term expectations remain stable. Both headline and core inflation are expected at 2.0% in 2031. The risk balance is tilted upwards for inflation through 2028, but becomes more balanced afterward. This points to stronger short-term price pressure alongside longer-term stability.

Energy prices affect inflation directly because energy is part of household consumption and business costs. When energy becomes more expensive, households may pay more for fuel, heating and electricity. Businesses may also face higher production, transport and operating costs.

Those higher costs can pass indirectly into other prices. For example, more expensive transport or production can raise the prices of goods and services. The survey connected the upward revisions for 2026 and 2027 primarily with higher energy prices and their indirect effects.

A special survey question examined the war in the Middle East. Responses indicated that additional energy-price effects are mainly expected in 2027. Forecasters judged second-round effects limited, so they did not expect a broad and persistent spread into wages and other prices. Even so, inflation risks were tilted upward for 2026 through 2028.

When inflation expectations are anchored, people and businesses broadly believe inflation will settle near a stable longer-term rate. Here, that rate is 2.0%. The phrase signals that a temporary price shock has not fundamentally changed expectations about inflation’s eventual path.

The survey provides a clear example. Forecasters raised their inflation expectations for 2026 and 2027, but left 2028 unchanged at 2.0%. They also kept both headline and core inflation expectations for 2031 at 2.0%. This combination shows near-term concern alongside long-term stability.

Anchoring matters because expectations can influence decisions about prices, wages, saving and spending. If expectations remain stable, a temporary energy shock may fade without becoming persistent. The survey’s risk balance was tilted upward through 2028, but it became more balanced at longer horizons, supporting the view that expectations remain anchored.

A second-round effect begins after the initial energy-price increase. Workers may seek higher wages to offset lost purchasing power. Businesses facing higher wages and energy costs may then raise prices further. This can extend inflation beyond energy itself.

For example, a transport company could face higher fuel costs and increase delivery prices. Workers in affected industries might seek pay increases. If those wage increases raise business costs, prices for goods and services could rise again. The original energy shock would then influence a wider range of prices.

The survey responses suggested that second-round effects from the Middle East-related energy shock will remain limited. That helps explain why longer-term inflation expectations stayed at 2.0%. If such effects spread widely, inflation could remain higher for longer and require a stronger policy response, but the article does not forecast that outcome.

The forecasts suggest a euro-area economy that is expanding, but not rapidly. Real GDP growth is expected to reach 1.0% in 2026 and 1.3% in both 2027 and 2028. Near-term expectations were revised upward, mainly because recent data were stronger than previously expected.

The labour market outlook is also relatively steady. Forecasters expect the unemployment rate to be 6.4% in 2026, then decline gradually to 6.1% over the longer term. This points to some improvement, but not a dramatic fall in unemployment.

Risks remain important. The balance of risks for GDP growth is tilted somewhat to the downside at all horizons. Meanwhile, longer-term growth expectations for 2031 rose by 0.1 percentage points to 1.3%. Overall, the forecasts combine continued short-run growth with modest expansion and downside uncertainty.

Inflation expectations give the ECB information about how households, businesses and markets may view future prices. If expectations rise persistently, the ECB may consider tighter interest-rate policy to reduce demand and prevent inflation from becoming embedded. The survey itself does not predict a specific ECB decision.

Higher interest rates usually increase borrowing costs for households and businesses. That can reduce spending and investment, slowing economic growth and easing pressure on prices. Lower rates can reduce borrowing costs and support demand, although the direction and timing of effects can vary.

Expectations can also affect actual inflation directly. Businesses may raise prices sooner, and workers may seek larger wage increases, if they expect persistent inflation. Stable expectations can limit that feedback. In this survey, near-term inflation expectations rose, but longer-term headline and core expectations remained anchored at 2.0%, indicating a temporary shock was still expected.