Europe’s Rising Inflation-Risk Gauge Is a Headache for ECB
- Long-term market measures show ECB will struggle with 2% goal
- The moves come as ECB approaches end of its hiking cycle
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Market measures of inflation risk in Europe are testing record highs and posing a challenge to European Central Bank officials as they eye the end of their historic tightening cycle.
A gauge of future inflation closed at its highest level since 2010 Monday, pointing to an average pace of 2.67% from 2028-2033. The move comes as yields on longer-maturity bonds climb faster than those on shorter notes, with investors demanding higher returns to reflect the risk inflation stays elevated longer than expected.