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Eurozone Inflation Steady: ECB Policy on Hold?
30 Nov
Summary
- Euro-zone inflation is projected to remain near 2% in November.
- Underlying inflation is expected to stay at 2.4% this month.
- Mixed national inflation data may lead to an ECB holding pattern.
Euro-zone inflation is projected to remain close to the European Central Bank's 2% target in November, with most economists expecting a reading of 2.1%. The core inflation rate, excluding volatile energy prices, is forecast to stay at 2.4%. This steady inflation data is likely to encourage the ECB's Governing Council to maintain current interest rates at their December meeting.
The central bank finds itself in a period of observation, with no clear consensus on the next monetary policy move. Recent national inflation reports presented conflicting trends: stronger-than-expected figures from Germany and Spain were offset by weaker data from France and Italy. This ambiguity could lead policymakers to maintain their current stance, focusing instead on crucial long-term economic projections extending to 2028.
Economists hold divergent views on the future inflation trajectory and potential ECB actions. While some predict a slowdown in price growth, suggesting a case for future rate cuts, others foresee stronger economic growth and inflation, supporting a prolonged period of unchanged rates, or even a potential hike. Vice President Luis de Guindos has indicated a limited risk of inflation undershooting the target.
