Investors’ euro zone inflation expectations fall below 2% for first time since 2022

LONDON (Reuters) – A closely watched gauge of long-term euro zone inflation expectations fell below 2% for the first time since July 2022 on Tuesday, a sign investors think faltering growth means inflation could undershoot the European Central Bank’s target rate.

The five-year-five-year forward inflation swap fell to 1.9994%, LSEG data showed, a relatively sharp fall from above 2.2% in October. The swap reflects investors’ expectations for inflation for the five-year period that begins in five years’ time.