LONDON, June 6 (Reuters) - A key market gauge of long-term euro zone inflation expectations dropped to an all-time low on Thursday, as European Central Bank policy action failed to lift confidence that the central bank will meet its near-2% inflation target.
The ECB pushed back the timing of its first post-crisis interest rate hike again on Thursday and said it would continue paying banks for lending in its latest effort to revive a slowing euro zone economy.
The five-year, five-year inflation breakeven inflation fell to 1.2427%, dropping below a previous low set in 2016 when deflation fears gripped the currency bloc.
“People expected a lot more bold action from the ECB at this stage and now they don’t believe they are able to achieve the convergence (of inflation) just with the measures announced today,” said Commerzbank rates strategist Christoph Rieger. (Reporting by Dhara Ranasinghe and Abhinav Ramnarayan; Editing by Sujata Rao)