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Eurozone Inflation Holds at 2% in July, Reinforcing ECB Pause on Rate Cuts

Policymakers forecast prices dipping under target for roughly 18 months before returning to 2% by 2027

People walk at the promenade by the river Rhine with the skyline in the background including the Rheinturm in Duesseldorf, Germany, May 13, 2024. Picture taken with long exposure. REUTERS/Jana Rodenbusch/ File Photo
Dry-cured hams are hung at a grocery shop in Rome, Italy, June 17, 2024. REUTERS/Guglielmo Mangiapane/File Photo
A waiter carries food on the day of the official opening of the 189th Oktoberfest, the world's largest beer festival in Munich, Germany, September 21, 2024. REUTERS/Angelika Warmuth/File Photo
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Overview

  • Eurozone headline inflation matched the ECB’s 2% objective in July after sliding from over 6% a year ago.
  • Germany recorded a cooler-than-expected rate of 1.8%, Italy slowed to 1.7%, France remained at 0.9%, and Spanish inflation is seen jumping to 2.7%.
  • Core inflation excluding food and energy stayed at 2.3%, while services price growth eased to 3.1% and goods inflation picked up modestly.
  • The ECB halted rate cuts after trimming its key rate to 2% in June and signalled it is in no hurry to adjust policy further.
  • A stronger euro, subdued wage growth and US trade barriers are expected to keep price pressures muted in the near term.