The European Union’s statistics agency reported a decrease in headline inflation to 2.5% in June, aligning with economists’ expectations.
Core inflation, excluding the volatile effects of energy, food, alcohol and tobacco, remained at 2.9%, slightly missing analysts’ forecast of 2.8%. Meanwhile, services inflation maintained at 4.1%.
Investors are now analyzing the implications of these figures on interest rate trends in the euro zone after the European Central Bank’s recent 25 basis points rate cut in June.
ECB Vice President Luis de Guindos emphasized the uncertainty ahead, stating that while inflation is anticipated to converge towards the 2% target, the path forward will be challenging.
Market expectations suggest a probability of two more 25 basis point rate cuts in the ECB’s remaining meetings this year, with a limited likelihood of an additional cut in the upcoming month.
