Inflation in the Eurozone had surged to 2.3% annually in November, overreaching the European Central Bank’s (ECB) target rate of 2%. This figure, which aligned with economists’ expectations polled by Reuters, represents an increase from October’s 2% rate.
Following a decline to 1.7% in September, inflation rates have been escalating for two months consecutively, mainly driven by diminishing deflationary pressure brought about by energy prices, coupled with robust inflation in the services sector.
Market participants have fully anticipated a 25-basis-point rate cut from the ECB in December, which would signify the bank’s fourth rate reduction in the current year.
Meanwhile, expectations of a substantial 50-basis-point cut have been dwindling since last month, with slight enhancements in the Eurozone’s tepid growth forecast and the resurgence in inflation.
Though inflation in October slightly surpassed projections, ECB policy makers including executive board member Isabel Schnabel, have underscored the importance of exercising prudence when implementing monetary easing measures.
