Analysts expect some slight core moderation again following September’s downside surprise, to a rounded 2.6%.
MNI (LONDON) - EXECUTIVE SUMMARY
- ECB officials have expressed increased confidence in the inflation outlook in recent weeks, underscored by the slight wording adjustments made in the October policy statement. Inflation is now expected to return sustainably to target “in the course of next year”, rather than the second half of 2025.
- This confidence was also visible at last week’s IMF/World Bank annual meetings, where several ECB policymakers appeared encouraged by September’s lower-than-expected figures and some dovish members noted that inflation risks were likely skewed to the downside.
- In October, headline inflation is expected to tick up to 1.9% Y/Y (vs 1.7% prior) on energy base effects. However, this won’t distract markets from developments in the core measure, which remains the focus amongst policymakers. Analysts expect some slight moderation again following September’s downside surprise, to a rounded 2.6% (from 2.7% prior).
- October inflation (and next month’s November print) will be a crucial input for the ECB’s December macroeconomic projections. These forecasts will be key in determining whether the bank can push ahead with an outsized 50bp cut in December, and/or make changes to its guidance to keep policy restrictive for as long as necessary.
PDF Analysis Here: October2024EZCPIPreview.pdf
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