Goldman Sachs(US:GS) Goldman Sachs·2025-05-28 03:15Economic Projections - The ECB is expected to revise down the annual average headline inflation projection to 1.7% for 2026, a decrease of 0.2 percentage points (pp) from previous estimates[5] - Core inflation projections are anticipated to be lowered to 1.8% in 2026, also a reduction of 0.2pp[17] - The growth forecast for the remainder of 2025 is likely to be downgraded to 0.1% quarter-on-quarter (non-annualized)[21] Market Variables Impact - The Euro appreciated by 4% against a basket of trade-weighted currencies and by 8% against the Dollar since the last projections[5] - Spot prices for oil and gas fell by 25% during the same period, significantly impacting inflation projections[5] - Changes in market variables are estimated to subtract 0.6pp from headline inflation and 0.3pp from core inflation projections in early 2026[12] Policy Implications - The anticipated revisions in inflation and growth projections provide strong motivation for the ECB to implement a 25 basis points (bp) cut at the upcoming meeting[21] - An additional rate cut to 1.75% is expected, likely occurring in July[21] - The new projections will also consider factors such as core inflation momentum and incoming wage data, which showed a cooling trend[15]