Consumer price inflation in the eurozone rose marginally in November, but remained marginally above the European Central Bank’s medium-term target, suggesting that interest rates will remain on hold for the foreseeable future.
The flash consumer price index (CPI) estimate rose by 2.2% annually last month, above the 2.1% October release.
Month-on-month, the reading dropped 0.3% last month after posting a rise of 0.2% in October.
Stripping out more volatile items like food and fuel, the "core" number remained at 2.4% in the twelve months to November.
The European Central Bank held its key rate steady at 2% at the end of October, based on the assessment that inflation remains close to the 2% medium-term target and the inflation outlook is broadly unchanged.
This sanguine view is likely to be supported by the ECB’s own consumer expectations survey, which pointed to unchanged price growth expectations three and five years out, and indicated broadly steady income and spending plans.
The ECB’s next policy-setting meeting concludes on Dec. 18, and financial markets see almost no chance of an interest rate change then, with only a one-in-three chance of one last rate cut by the middle of next year.
“The ECB is expected to stay on hold through 2026-7,” said analysts at ABN Amro, in a note. “Near term risks are tilted to another cut given the looming inflation undershoot, but those risks could tilt towards a hike as 2027 develops.”
Source : Investing.com