It may be good news for consumers, businesses, and central banks that the European inflation peak has passed, but it’s still too early to draw any firm conclusions.
According to reports that have been released since Friday, with the decrease in natural gas prices and the beginning of state help, price rise from Germany to Spain slowed down more in December than economists had anticipated.
However, these declines conceal the rising pressure in indices that don’t include goods like energy and food, which is exactly what the European Central Bank is monitoring to decide how much to hike borrowing costs.
This makes it unlikely that the ECB’s short-term policy intentions would alter, similar to how the Federal Reserve in the US has maintained its hawkish stance despite five months of declining inflation.
In reliance on a 250 basis point hike from July, President Christine Lagarde has already committed to increasing the interest rate by half a percent again next month — “and possibly another one after that.”
In light of this, the EUR/USD pair begins the year with a decline that lasts the entire week:
According to the most recent ECB predictions, the target level of 2% for inflation won’t be reached until the end of 2025. Forecasts that have been updated won’t be available until March.
Perhaps we have reached peak inflation, but core inflation is rigid, according to Piet Christiansen, a chief strategist at Danske Bank A/S. “For this reason, the ruling from February is final.”
Economists have revised their projections upward and now generally anticipate the two indicated steps to increase by 50 basis points as a result of the ECB’s meeting in December, which was combative. Traders are placing bets on a similar conclusion, although cutting their predictions for where rates would be set in response to Spain’s weaker-than-expected inflation figures.
Prices in the fourth-largest economy in the eurozone increased 5.6% year over year in December, up from 6.7% in November. Portugal, Germany, and France all saw decreases in their inflation rates. Data about the eurozone, which on January 1 welcomed Croatia as its 20th member, is scheduled to be released on Friday. The second consecutive decrease in growth to 9.5% is predicted by analysts.
Lagarde created this message on her own, intending for it to draw attention to the primary inflation index.
She asserted that there are “strong reasons to believe” that inflation will increase once more in January and added, “We cannot dwell on a single figure.”
According to Lagarde, “We have to look at the trend, the inflation prognosis, what has been accomplished, and, of course, where we want to move.” We still have time, and the race is still far from over.
The material has been provided by InstaForex Company – www.instaforex.com
It may be good news for consumers, businesses, and central banks that the European inflation peak has passed, but it’s still too early to draw any firm conclusions.
According to reports that have been released since Friday, with the decrease in natural gas prices and the beginning of state help, price rise from Germany to Spain slowed down more in December than economists had anticipated.
However, these declines conceal the rising pressure in indices that don’t include goods like energy and food, which is exactly what the European Central Bank is monitoring to decide how much to hike borrowing costs.
This makes it unlikely that the ECB’s short-term policy intentions would alter, similar to how the Federal Reserve in the US has maintained its hawkish stance despite five months of declining inflation.
In reliance on a 250 basis point hike from July, President Christine Lagarde has already committed to increasing the interest rate by half a percent again next month — “and possibly another one after that.”
In light of this, the EUR/USD pair begins the year with a decline that lasts the entire week:
According to the most recent ECB predictions, the target level of 2% for inflation won’t be reached until the end of 2025. Forecasts that have been updated won’t be available until March.
Perhaps we have reached peak inflation, but core inflation is rigid, according to Piet Christiansen, a chief strategist at Danske Bank A/S. “For this reason, the ruling from February is final.”
Economists have revised their projections upward and now generally anticipate the two indicated steps to increase by 50 basis points as a result of the ECB’s meeting in December, which was combative. Traders are placing bets on a similar conclusion, although cutting their predictions for where rates would be set in response to Spain’s weaker-than-expected inflation figures.
Prices in the fourth-largest economy in the eurozone increased 5.6% year over year in December, up from 6.7% in November. Portugal, Germany, and France all saw decreases in their inflation rates. Data about the eurozone, which on January 1 welcomed Croatia as its 20th member, is scheduled to be released on Friday. The second consecutive decrease in growth to 9.5% is predicted by analysts.
Lagarde created this message on her own, intending for it to draw attention to the primary inflation index.
She asserted that there are “strong reasons to believe” that inflation will increase once more in January and added, “We cannot dwell on a single figure.”
According to Lagarde, “We have to look at the trend, the inflation prognosis, what has been accomplished, and, of course, where we want to move.” We still have time, and the race is still far from over.
The material has been provided by InstaForex Company – www.instaforex.com
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