Bank of Italy updates economic outlook released on 3rd April: CPI forecasts raised across the board

The Bank of Italy has revised its economic outlook, lowering GDP growth forecasts while significantly raising inflation expectations across the board.

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Bank of Italy updates economic outlook released on 3rd April: CPI forecasts raised across the board

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Growth:

  • Cuts 2026 GDP growth forecast to 0.5% (prev. 0.6%)
  • Cuts 2027 GDP growth forecast to 0.5% (prev. 0.2%)
  • Maintains 2028 GDP growth forecast at 0.8%

Inflation:

  • Raises 2026 CPI to 2.6% (prev. 1.4%)
  • Raises 2027 CPI to 1.8% (prev. 1.6%)
  • Raises 2028 CPI to 1.9% (prev. 1.6%)
Context

This divergence suggests potential pressures on monetary policy, indicating that the central bank may need to address rising inflation despite sluggish growth. Such dynamics could influence market sentiment and positioning, particularly in fixed income and currency markets.

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