ECB's favoured measure of inflation expectations hits new low

LONDON (Reuters) - The European Central Bank's preferred measure of the market's long-term inflation expectations fell to its lowest this year on Friday, with a small take-up of central bank four-year loans exacerbating deflation fears.

The five-year, five-year break-even forward rate, which measures roughly where markets expect 2024 inflation forecasts to be in 2019, fell to around 1.91 percent .

"Taken at face value, this would imply the market already sees the ECB as having fallen behind the curve despite its recently unveiled credit easing measures," Rabobank strategists said in a note.

Banks took a below forecast 82.6 billion euros (64.91 billion pounds) in four-year loans from the ECB. The banks will repay next week about 20 billion euros of three-year loans taken at the height of the crisis.

Taken together, those two operations represent an insignificant increase in the ECB's balance sheet and will do little to boost ultra-low inflation, analysts say.

(Reporting by Marius Zaharia, editing by Nigel Stephenson)