MNI BRIEF: Eurozone Inflation Lower, But Core Sticky
Annual inflation slows in November, but core stickiness could still prove troublesome for ECB.
There was some relief for the European Central Bank - and consumers across the region - in November, as headline harmonsied inflation slowed to an annual rate of 10.0%, down from 10.6% in October. Core inflation, however, was unchanged from the previous month's read at 5% year-on-year, data released by Eurostat Wednesday showed.
The ECB continues to grapple with higher inflation, which currently sits well in advance of its 2% medium-term target. To date this year, policymakers have raised the benchmark deposit rate from -0.5% and expectations are for at least another 50 bps of hikes at the December 15 meeting. (MNI SOURCES: ECB Weighs 50 In December, Hawks To The Fore)
Markets have downgraded the ECB terminal rates to closer to 2.8-2.9% by mid-2023 and are currently pricing around 56bp for the November rate decision. Yet the lack of easing in core inflation likely implies the decision between 50bp and 75bp could be close.