Economics in a picture
Long-term inflation forecasts for Portugal and the euro area around the ECB's objective
The survey of professional forecasters released by Consensus Economics reveals that in the euro area inflation forecasts for horizons between 5 and 10 years have been very close to the ECB's price stability objective since 2003. In the case of Portugal, in the period leading up to the economic and financial crisis, long-term inflation forecasts were broadly above 2%. As of 2009, these forecasts have been revised downward, standing at levels close to those of the euro area in recent years.
The low volatility of inflation forecasts for horizons between 5 and 10 years in Portugal and the euro area is in line with the notion that in a monetary union in which the monetary authority has a price stability objective, changes in inflation in the short-term should not influence long-term inflation expectations.
For more details see Box 6: “Inflation forecasts: Portugal and the euro area”, published in the Economic Bulletin of Banco de Portugal, May 2019.
Prepared by Nuno Lourenço. The analyses, opinions and findings expressed above represent the views of the authors and not necessarily those of Banco de Portugal or the Eurosystem.
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