Tourists pass shops on a pedestrian street in the old town of A Coruña, Spain, Thursday, September 26, 2024.
Manaure Quintero | Bloomberg | Getty Images
Preliminary data released by Eurostat on Tuesday showed that euro zone inflation fell to 1.8% in September, below the European Central Bank’s 2% target.
The data was in line with expectations of economists polled by Reuters after annual inflation hit a three-year low of 2.2% in August.
Core inflation, which excludes volatile energy, food, alcohol and tobacco prices, was 2.7%. It is expected to be unchanged from August’s 2.8%.
Data show that the Eurozone services sector inflation rate fell to 4% in September from 4.1% in August.
The data came after inflation in several major euro zone economies, including France and Germany, fell below the ECB’s 2% target in September. Preliminary data showed on Monday that the unified inflation rate in Europe’s major economies fell more than expected on an annual basis to 1.8%.
European Central Bank President Christine Lagarde said on Monday that policymakers are increasingly confident that inflation will return to the 2% target.
“Looking ahead, inflation is likely to rise temporarily in the fourth quarter of this year due to previous sharp falls in energy prices that have exceeded the annual rate, but the latest developments strengthen our confidence that inflation will return to target in time,” she said. said at the hearing Member of the Economic and Monetary Affairs Committee of the European Parliament.
“We will take this into consideration at our next monetary policy meeting in October,” Lagarde added. The next ECB meeting will be held on October 17.
European Central Bank’s next steps
Following her comments, BofA Global Research economists changed their outlook on the prospects for an ECB rate cut, noting that they now expect a rate cut in October.
Economists had previously predicted the central bank would keep interest rates steady this month, but now said Lagarde’s comments were “the same rationale she used when she cut rates in September” and suggested “a quasi-definite move will be made in October.” ‘”.
Deutsche Bank economists on Tuesday also raised their forecast for the European Central Bank’s next rate cut to October from December.
London Stock Exchange Group (LSEG) data showed that earlier on Tuesday, the market was widely expected to cut interest rates by 25 basis points in October..
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