Euro zone economic sentiment fell to new record lows in March as did inflation expectations among households and companies, data showed, boosting the likelihood of a deep ECB interest rate cut on Thursday.
Economic sentiment in the 16 countries using the euro fell to 64.6 points, the European Commission said in a monthly survey, from 65.3 points in February, defying market expectations of a mild rebound to 65.5 points.
It was the indicator's lowest value since measurements started in 1990 as industry sentiment hit new lows at -38 points from -36 in February, services fell to -25 from -24 and consumer optimism set a new record low of -34, from -33 in February.
All of those components were weaker than expected, pointing to deepening economic gloom just days before the European Central Bank meets on interest rates amid strong expectations of a 50 basis point cut to 1 per cent.
The ECB wants annual inflation to be just below 2 per cent, but consumer price growth slowed to 1.2 per cent in February and is seen falling to 0.8 per cent in March.
The ECB is also keen to keep inflation expectations anchored around its inflation target. The Commission survey showed that inflation expectations among households fell to 1 point, the lowest level ever, from 5 points in February.
Among companies, selling-price expectations dropped to -14 points from February's -11 points, again setting a new lowest value since 1990.
Reuters