May 14, 2018 / 10:18 AM / a year ago

Long-term market gauge of euro zone inflation at 2-1/2 month high

FILE PHOTO: European Union flags flutter outside the European Central Bank (ECB) headquarters in Frankfurt, Germany, April 26, 2018. REUTERS/Kai Pfaffenbach/File Photo

LONDON (Reuters) - A key market gauge of long-term inflation expectations in the euro zone rose to its highest level in 2-1/2 months on Monday, resuming a recent upward march.

The five-year, five-year breakeven forward rate — a measure closely tracked by the European Central Bank — rose to 1.7192 percent EUIL5YF5Y=R, up from a low of 1.67 percent in April.

The rise in inflation expectations coincided with a selloff in bonds markets after the ECB’s Francois Villeroy de Galhau said the central bank could give fresh guidance on the timing of its first rate hike as the end of its bond stimulus approaches.

Reporting by Dhara Ranasinghe

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