Eurozone Inflation Eases But ECB Likely To Keep Interest Rates On Hold: MIDF Research Finds

Consumer prices slip to 2.5% but core rate stays high, prompting little belief in further cuts in borrowing costs, news reports cited recently
MIDF Research said the ECB will keep its interest rate status quo for Jul-24 policy rate.

However, the central bank may consider another cut in contingent upon core inflation rate registering lower than ECB expected in 2HCY24.

Euro area’s consumer inflation rate moderated to +2.5%yoy in Jun-24 (May-24: +2.6%yoy), conforming to market expectations.

Food inflation rate eased to +2.5%yoy, the lowest since Sep-21.

Energy price inched up by +0.2%yoy (May-24: +0.3%yoy).

Excluding volatile price items, core inflation rate was unchanged at +2.9%yoy, missed market projection of +2.8%yoy.

On a month-on-month basis, overall price growth steadied at +0.2%mom while core inflation rose by +0.3%mom.

As of 1HCY24, average headline inflation rate and core inflation rate are +2.6% and +3.0% respectively.

These figures are slightly lower but in tandem with ECB’s forecast trajectory, +2.5% for headline and +2.8% for core in 2024, MIDF cited in a note today (July 3).

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