Bert Colijn, Senior Economist at ING, notes that the Eurozone’s core inflation has dipped back to 1% and it will add to discussion about the ECBs path to normalising rates.
Key Quotes
“The drop in the oil price was much larger than the slide in inflation suggests, mainly caused by logistical problems that hindered supply in Germany and Netherlands for example, but also by higher taxes. The logistical issues are likely to fade out, which suggests that the inflation rate will continue to fall modestly over the coming months.”
“Softer headline inflation for the beginning of 2019 is largely expected, but the degree to which inflation will drop will be key for the ECB to determine when to hike. For now, the ECB maintains its forward guidance of a rate hike after the summer of next year, but if economic conditions continue to slow sluggishness, the question is if that will be maintained.”
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