Sticky inflation won’t alter ECB June rate decision
by AIB Treasury Economic Research Unit
- Inflation data across the Eurozone printed slightly higher than expected in May, but are unlikely to alter the ECB’s monetary policy decision on Thursday.
- Near term, there may be some upside risk to energy prices, although earlier oil price rises have reversed significantly in recent weeks, with Brent Crude easing from above $90/barrel at end-April to under $82 by end-May.
- More importantly, the sharp rise in wages across the Eurozone in recent years, which has underpinned services inflation, appears to be moderating sharply.
- Thus, with the ECB now about to embark on a cutting cycle, the attention has turned to the pace of policy easing.
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