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