Morning edition · Monday, 26 October 2026
Podium vs Print: "shallow" and 3.1%
A bank economist calls this year's rate rises shallow. Households tell the ECB they expect 3.1% inflation. Both can be right.
“The main message from global central banks grappling with this year's macroeconomic surprises is that a relatively shallow rate hike cycle is underway.”
Bruce Kasman, global head of economics at JPMorgan, quoted by Reuters, 26 October 2026
3.1%
Households' median expected inflation for the next 12 months, up from 3.0%. They also expect the economy to shrink by 1.5%.
ECB Consumer Expectations Survey, September 2026, Published 23 October 2026
The podium. “The main message from global central banks grappling with this year’s macroeconomic surprises is that a relatively shallow rate hike cycle is underway,” JPMorgan’s Bruce Kasman said, quoted by Reuters on Monday1.
The print. In the ECB’s euro area household survey, published on Friday, expected inflation for the next 12 months rose to 3.1% from 3.0%2. Households expect the economy to shrink by 1.5% over the next year, worse than the 1.2% fall they expected in August, and unemployment to reach 11.3%2.
The gap. The economist describes interest rates; the household describes its budget: expected spending growth rose to 3.7% from 3.6% while expected income growth was only 1.1%2. Desk arithmetic: households expect their spending to grow more than three times as fast as their income. That gap is paid for with savings or credit.
The verdict. Both can be true: few, small rate rises, and households squeezed anyway. Three years out, households still expect 2.9%, as in August2. That anchor is what the central bank guards, and so far it holds.
What to watch
- Whether Lagarde quotes the household numbers on Thursday; the ECB watches expectations as closely as prices.
- The three-year expectation, unchanged at 2.9%2. If that moves, the committee will move faster.
Economists measure the slope of a cycle. Households measure the till. The till is the better forecaster of what people will do next.
Sources
- Asian shares make cautious start, Brent eases from six-month high — Reuters via Euronext, 26 Oct 2026, 01:46.
- ECB Consumer Expectations Survey results – September 2026 — Banque de France (ECB press release), 23 Oct 2026.
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