Nowotny Says Too Early to Judge Drop in Inflation Expectations

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European Central Bank Governing Council member Ewald Nowotny said it’s too soon to draw conclusions from a drop in inflation expectations.

“It is too early,” Nowotny told Bloomberg after a conference outside Moscow with Russian central-bank Governor Elvira Nabiullina. “This is something one has to observe, I would be warning against premature results.”

Market-based inflation expectations were sliding before the last ECB policy meeting and have accelerated their decline since, adding pressure on the regulator to step up policy support for the region’s economy. Five-year forward five-year inflation swaps, a gauge of investor estimates of price increases in coming years, dropped Wednesday to 1.1830%, well below the ECB’s target of close to, but below 2%.

Read More: Europe Inflation Expectations at Record Low Worsens ECB Headache

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