ECB: Growth Expectations Revised Lower In ECB Q1 SPF

The ECB’s Survey of Professional Forecasters saw respondents revised 2025 growth expectations down to 1.0% Y/Y (vs 1.2% in the Q4 survey), below the ECB’s December macroeconomic projection of 1.1%. 2026 GDP expectations were also revised lower to 1.3% (vs 1.4% in Q4) – again a tenth below the ECB’s forecast. The revisions underscore market expectations an aggressive, front-loaded ECB easing cycle this year, with growth risks clearly tilted to the downside.

• On growth, “The revised outlook mainly stemmed from weaker than previously expected future growth, rather than carry-over effects”.

There was a two-tenth rise in 2025 headline inflation expectations to 2.1% (consistent with the ECB December projection), while 2026 and longer-term forecasts were unchanged. 

• The weaker Euro and higher energy prices were cited as drivers of the headline uptick, while some noted more persistent services price pressures. A smaller share of respondents lowered their forecasts on "expectations of declining energy prices and weaker than expected economic growth".
• Core inflation expectations were unchanged at 2.2% in 2025 and 2.0% in 2026, while longer-term expectations eased to 1.9% (vs 2.0% in Q4).
• “Uncertainty surrounding the shorter and medium-term inflation outlook decreased further, while the balance of risks remained tilted somewhat to the upside”.