March 12, 2020 / 8:52 AM / a month ago

Key market inflation gauge falls further ahead of ECB

LONDON, March 12 (Reuters) - A key market gauge of long-term euro zone inflation expectations in the euro area hit a new record low on Thursday, pushing further below 1% ahead of a European Central Bank meeting.

The collapse in inflation expectations is a worrying sign for the ECB, which targets inflation at close to 2%.

Analysts say the fall in five-year, five-year breakeven forwards suggests investors are positioning for deflation risks.

The breakeven forward, followed closely by the ECB, fell as low as 0.8866%. It has slid around 20 basis points in the past week alone in the face of the coronavirus outbreak and a crash in oil prices. (Reporting by Dhara Ranasinghe; editing by Sujata Rao)

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