Inflation in the eurozone seems to have stabilized at around two percent.
According to an estimate from Eurostat, the EU’s statistics office, inflation for July was exactly two percent.
Inflation was also recorded at two percent in June for the euro-using countries.
The European Central Bank (ECB) aims to maintain a medium-term inflation target of two percent, adjusting interest rates as necessary.
Allan Sørensen, chief economist at Dansk Industri, indicates that the steady inflation suggests the ECB is unlikely to implement further interest rate cuts in this cycle.
“The ECB’s interest rate is now at a neutral level. A further decrease could risk pushing inflation higher again. Only if growth significantly falters would the ECB consider substantial rate reductions,” he remarked.
Nonetheless, Dansk Industri anticipates a minor interest rate cut this autumn.
Following a meeting at the end of July, the ECB decided to maintain the interest rate for the first time in a year, having previously cut rates consecutively eight times.
Søren Kristensen, chief economist at Sydbank, points out that core inflation has not yet fully attained the two percent mark.
Core inflation, excluding food and energy prices, was estimated at 2.3 percent in July, unchanged from June.
However, Kristensen believes that inflation in the eurozone will remain “reasonable and low,” partly due to the EU’s decision not to retaliate against U.S. tariffs.
“This could lead to a resolution of the trade war that results in lower prices in the eurozone. These factors contribute to our expectation of continued reasonable and low inflation in the eurozone,” he stated in an analysis.
/ritzau/
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