Panoramic view of the interior of the stadium after Portuguese fans defeated Slovenia in a penalty shootout during the Euro 2024 Round of 16 match between Portugal and Slovenia in Frankfurt am Main, Germany, on July 1, 2024.
Harriet Lander – UEFA | UEFA | Getty Images
The European Union’s statistical agency said on Tuesday that the euro zone’s overall inflation rate fell to 2.5% in June, while closely watched core and services sector data remained stable.
The headline text was in line with expectations of economists polled by Reuters. In May, inflation rose two percentage points to 2.6%.
Excluding the impact of fluctuations in energy, food, alcohol and tobacco, core inflation remained at 2.9% from the previous month, slightly lower than analysts’ forecast of 2.8%.
The service price increase also remained unchanged at 4.1%.
Following the European Central Bank’s first rate cut of 25 basis points in June, investors will now parse what the latest data means for interest rates in the 20 euro zone countries.
Volatility in the overall consumer price index has long been expected as the base effect of volatility in energy markets eases.
In June, energy inflation in the euro zone increased at an annual rate of 0.2%, a sharp change from earlier this year when the industry was under strong deflationary pull.
European Central Bank Vice President Luis de Guindos told CNBC’s Annette Weisbach that while the central bank is confident that inflation will move closer to its 2% target, the next few months Month will be a “bumpy road” and there is no “predetermined path” for monetary policy. He made the comments on the sidelines of the European Central Bank’s Central Banking Forum in Sintra, Portugal.
According to London Stock Exchange pricing data, money markets expect that the European Central Bank is likely to cut interest rates twice more, by 25 basis points each time, at its remaining four meetings this year. They estimate there is only a 33% chance of a subsequent rate cut this month.
About The Author
