ECB Forecasts Little Change in Inflation Expectations Amid War in the Middle East

The European Central Bank (ECB) released its Survey of Professional Forecasters for the third quarter of 2026. The survey showed that headline inflation expectations were largely unchanged from the previous round, but core inflation expectations increased only slightly.

Forecasters predicted a decrease in headline inflation from 2.7% in 2026 to 2.2% in 2027 and 2.0% in 2028. Longer-term HICP inflation expectations for 2031 remained at 2.0%. The expected core inflation rate, excluding energy and food, was revised upwards only for 2026.

The survey also asked about the indirect and second-round effects of the war in the Middle East on inflation. Respondents predicted limited effects, mainly concentrated in 2026, with a maximum impact of around 0.2 percentage points that year. Second-round effects were expected to be even more limited.