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The Eurozone November flash inflation round will help shape consensus ahead of the ECB’s December policy meeting and will be the last set of inflation data entering the December projection round.
Although analysts, markets and policymakers still appear to favour a 25bp December cut, there remains some speculation around scope for a larger 50bp cut. The weak November flash PMI round saw markets briefly price a ~60% implied probability of such a move last week, though this has since pulled back to ~35%. A deceleration of core inflation pressures in November could generate a renewed bout of dovish repricing at the front-end, particularly with analysts expecting an uptick to 2.8% Y/Y (vs 2.7% prior).
Analysts expect an acceleration of both core goods and services annual inflation in November, the latter largely due to base effects. Meanwhile, headline expectations are for a tick up to 2.3% Y/Y on the back of energy base effects (vs 2.0% prior). With base effects potentially clouding the interpretation of the annual rates (particularly given the lack of details in the flash release), we will continue to focus on developments in underlying inflation momentum using the ECB’s seasonally adjusted data.
Sign up now for free trial access to this content.
Please enter your details below.
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.
MNI (LONDON)
Core To Shape Consensus Ahead of December ECB
The Eurozone November flash inflation round will help shape consensus ahead of the ECB’s December policy meeting and will be the last set of inflation data entering the December projection round.
Although analysts, markets and policymakers still appear to favour a 25bp December cut, there remains some speculation around scope for a larger 50bp cut. The weak November flash PMI round saw markets briefly price a ~60% implied probability of such a move last week, though this has since pulled back to ~35%. A deceleration of core inflation pressures in November could generate a renewed bout of dovish repricing at the front-end, particularly with analysts expecting an uptick to 2.8% Y/Y (vs 2.7% prior).
Analysts expect an acceleration of both core goods and services annual inflation in November, the latter largely due to base effects. Meanwhile, headline expectations are for a tick up to 2.3% Y/Y on the back of energy base effects (vs 2.0% prior). With base effects potentially clouding the interpretation of the annual rates (particularly given the lack of details in the flash release), we will continue to focus on developments in underlying inflation momentum using the ECB’s seasonally adjusted data.
