Data give comfort ahead of June ECB decision
by AIB Treasury Economic Research Unit
- With the market leaning towards a June rate cut, the latest inflation and wage data for the Eurozone suggest price pressure continues to ease in line with expectations, building the case for a shift in ECB policy at its next meeting.
- Nevertheless, while some bumps in the road to a sustainable 2% inflation rate can be expected, the drivers of the inflationary surge in recent years have now largely dissipated.
- Thirdly, the sharp rise in wages across the Eurozone in recent years, which has underpinned core inflation, appears to be moderating sharply.
- Taken together, the data should give ECB policymakers comfort that a first rate cut is necessary in June.
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