March 11, 2020 / 1:33 PM / 19 days ago

Euro zone inflation gauge falls below 0.9% for first time, day before ECB meets

LONDON (Reuters) - A key market gauge of long-term euro zone inflation expectations in the euro area slumped to a new record low below 0.9% on Wednesday, a day before the European Central Bank meets.

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 to as low as 0.8950% EUIL5YF5Y=R. It has slid almost 25 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 Tommy Reggiori Wilkes

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