MNI BRIEF: Brussels Warns On Possible ECB Rate Cut Delays
Latest Commission forecasts saying a delayed slowing of service price inflation could limit ECB rate cuts.
The European Commission warned Wednesday that the decline in inflation across the euro area may be slower than projected, leading the ECB to delay rate cuts until the decline in service sector inflation is clearer.
The persistence of inflation in the US may also lead to delays in cuts by the Fed and so tighten global financial conditions, the Commission writes in its Spring Economic Forecast. (see MNI SOURCES: Fed, Geopolitics, Feed ECB Caution Over Cuts)
The Commission also notes that some EU states may yet adopt additional fiscal consolidation measures in their 2025 budgets, potentially impact the economic recovery forecast for next year.