ECB Survey Sees Inflation at 3%: No Return to 2% Until 2028

Euro zone inflation is now expected to average 3.0% in 2026 and stay above the European Central Bank's 2% target until 2028, according to the ECB's Survey of Professional Forecasters published on Friday, October 30, 2026. The sharply higher outlook, reported by Reuters, points to another ECB rate increase in December, one day after policymakers held the deposit rate at 2.50%.

What did the ECB survey say?

The ECB's quarterly Survey of Professional Forecasters now sees inflation averaging 3.0% this year, up from 2.7% predicted earlier, Reuters reported from Frankfurt on October 30. Next year's projection was lifted to 2.6% from 2.2%.

Inflation has surged to nearly twice the ECB's goal, and forecasters now expect it may only return to the 2% target in 2028. That is a material shift: instead of a brief energy-driven spike fading next year, professional forecasters are pricing in above-target inflation for roughly two more years.

Why is euro zone inflation rising again?

Energy is the main driver. Reuters noted that changes in underlying inflation forecasts were more benign, suggesting the bulk of the increase came from energy costs, which now sit somewhere between the ECB's adverse and severe scenarios.

The background data show how sharp the shock has been. Euro-zone inflation reached 3.8% last month from a year earlier, the highest since September 2023, with energy prices climbing 18.8% over the same period amid the U.S.-Iran conflict's effect on oil markets. That context was also behind Thursday's ECB decision to hold rates while warning that rising energy prices create upside risks to inflation and downside risks to growth.

What about core inflation and wages?

Core inflation, which filters out food and energy, was seen averaging 2.4% this year and 2.5% next year in the survey — lower than headline inflation, but still above 2% even in 2028, Reuters reported.

There is one reassuring signal in the numbers. Forecasters do not expect a wage-price spiral: wage growth is seen slowing from 3.3% this year to 3.1% next year and 2.8% in 2028. In other words, the inflation problem is being driven mainly by energy costs landing on households and businesses, not by runaway pay settlements feeding a second round of price rises.

What does this mean for ECB rates?

Reuters reported the higher inflation path could force the ECB to raise interest rates again in December, after policymakers opted for a hold on Thursday. The deposit rate currently stands at 2.50%.

Independent forecasts point the same way. UBS, in analysis reported earlier in October, expected the ECB to keep the deposit rate at 2.5% at the October 29 meeting, then raise by a quarter point to 2.75% in December, with a further increase to 3% possible in the first quarter of 2027. UBS also expected euro-zone inflation to peak at 4% or higher in early 2027. Market pricing for the eventual peak rate, around 3.15%, sits above even that forecast.

UBS flagged two-sided risks: rates could peak sooner at 2.75% if French bond-market tensions or tighter financial conditions force the ECB to stop earlier. France's 10-year yield recently topped 5% for the first time since 2002, a reminder that higher ECB rates land unevenly across the euro zone's more indebted members.

Why markets are paying attention

For markets, the survey matters because it comes from the ECB's own forecaster panel and lands the day after a rate hold. A central bank that held rates while its forecasters lifted inflation to 3.0% for this year and 2.6% for next faces a difficult December meeting: hike and risk tightening into an energy shock, or hold and risk looking behind the curve while inflation runs at nearly twice target.

The euro, European government bonds and rate-sensitive bank and housing shares are the assets most directly in the frame. The next hard data — euro-zone inflation releases and the December Governing Council meeting — will show whether the forecasters' darker path is becoming reality.

This report describes what the survey found and why it matters for markets. It is not financial advice, and it does not recommend buying, selling or holding any asset.

Sources

• Reuters — ECB survey sees higher inflation in coming quarters
• IndexBox / UBS — ECB rate hike to 3% forecast on higher inflation
• Seoul Economic Daily — ECB holds rate at 2.5% as French bond turmoil offsets inflation

FAQ

What inflation does the ECB survey forecast for 2026?

An average of 3.0% for 2026, up from 2.7% in the previous survey, and 2.6% for 2027, up from 2.2%, according to Reuters reporting of the ECB's Survey of Professional Forecasters.

When will euro zone inflation return to the 2% target?

Not until 2028, according to the survey. Core inflation is also expected to remain above 2% even in 2028.

Will the ECB raise rates in December?

Reuters reported the higher inflation outlook will likely force a December increase after Thursday's hold at 2.50%. UBS separately forecasts a quarter-point rise to 2.75% in December. No December decision has been made yet.

What is driving the higher inflation forecast?

Mainly energy costs. Headline inflation hit 3.8% last month with energy prices up 18.8% year over year, while underlying and wage pressures were seen as more benign.