The barometer thereby reaches its so far highest level this year and signals cautious optimism. The participants have not been impressed by the negative economic forecasts publicised recently.
In July 302 analysts and institutional investors participated in the ZEW Financial Markets Survey which is conducted monthly by the Centre for European Economic Research (ZEW), Mannheim. The participants have been asked about their medium-term expectations concerning economic activity and capital markets. The ZEW Indicator of Economic Sentiment is the balance between positive and negative expectations of the future economic development in Germany concerning the timeframe of six months.
The expectations concerning the inflation rate in the Euro-area have decreased significantly this month. By now three quarters of the participants expect the rate to decrease within the coming six months. This could provide the ECB with room to further cut interest rates in order to stimulate growth.