Euro area consumers' inflation expectations eased in January, warranting slower pace of tightening from the European Central Bank.

Consumer price inflation prediction for one-year ahead slowed to 5.0 percent from 5.4 percent, and that for three years ahead eased marginally to 2.9 percent from 3.0 percent, the latest Consumer Expectations Survey from the ECB showed Thursday.

The survey was conducted among 14,000 consumers. Younger respondents again reported lower inflation perceptions than older respondents.

Consumers expect nominal income to grow 0.9 percent over the next twelve months, which was faster than 0.7 percent in October.

Expectations about nominal spending growth weakened for the first time since mid-2021, to 4.3 percent from 4.7 percent.

The economy is projected to shrink 2.0 percent over the next twelve months compared to -2.6 percent forecast in October. Consequently, expectations for the unemployment edged down to 12.4 percent from 12.5 percent.

In the monthly economic bulletin, the ECB said most indicators of longer-term inflation expectations remain around 2 percent, but further above-target revisions to some indicators warrant continued monitoring.

The Eurosystem staff sharply lowered their inflation projections from 8.4 percent in 2022 to 6.3 percent in 2023, in December.

The ECB has raised rates by 250 basis points in 2022, which is the fastest pace of monetary tightening in the central bank's history, to rein in the runaway inflation.

After the December meeting, President Christine Lagarde said there will be more interest rate hikes in future, at a steady pace.

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