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Services Stall Underscores ECB Need For Post-June Caution
- The Eurozone May flash inflation round saw services HICP more than reverse April’s progress, printing at 4.1% Y/Y – higher than what it was 6 months ago.
- This meant that the wider Eurozone core HICP inflation metric surprised to the upside at 2.9% Y/Y (vs 2.7% cons), with the headline reading likewise coming in above expected at 2.6% (2.5% cons).
- The ECB’s seasonally adjusted series also pointed to a further acceleration of services momentum in May.
- For the ECB, the May inflation metrics are very unlikely to stand in the way of the well-signalled June rate cut. However, the ongoing stickiness in services momentum will have a bearing on rate decisions past June.
- Recent ECB speak has again highlighted the differences in opinion amongst policymakers on this topic, and the May data will support the hawkish contingent’s calls for caution on the path ahead.
- Our review of May's preliminary Eurozone inflation data includes breakdowns and analysis of the national inflation prints, and some sell-side reactions.
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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