The advance CPI estimate for the euro area will be released next week; and the path of inflation in coming months is important in view of ECB’s expectation to gently start raising policy rates next year, according to analysts at ANZ.
Key Quotes
“So far, a sustainable rise in core inflation has been elusive. Despite unemployment trending lower (8.3% in June over 8.9%, pre-GFC median) and capacity utilisation rates approaching peak levels (85%), inflation has continued to disappoint.”
“Price growth in the services and non-energy industrial goods sectors is still below pre-crisis levels, while the deceleration in growth this year may slow the emergence of demand pull inflation pressures.”
“Additionally, business and consumer sentiments have suffered in view of global trade tensions. Against this backdrop, we expect the ECB to maintain benign forward guidance for the time being.”
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