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MNI Eurozone Inflation Preview - Sep '24: Key To October Cut

Core and services inflation are expected to remain steady at 2.8% Y/Y and 4.1% respectively.
BundesbankCentral Bank NewsHomepageCEEMEAEurozoneGermanyGlobalStoryEuropean Central BankInflation InsightMarketsRegion

MNI (LONDON) - EXECUTIVE SUMMARY

  • The Eurozone September flash inflation round might be the cycle’s first to move the needle between a 25bp rate cut and a hold at an upcoming ECB meeting.
  • Heightened concerns around the Eurozone growth outlook following weak September flash PMIs have seemingly lowered the bar to an October cut.
  • As such, a downward surprise in core – and especially services – inflation may be enough to tempt some Governing Council members into joining the dovish contingent that is already pushing for such a move behind the scenes.
  • Based on the analyst previews we have seen, headline inflation is expected to ease to 1.9% Y/Y in September. This would be the first time the annual HICP rate comes in below the ECB’s 2% target since June 2021.  
  • Core and services inflation are expected to remain steady at 2.8% Y/Y and 4.1% respectively. With temporary effects at play, this should put heightened focus on the ECB’s seasonally adjusted data, which will strip out at least some of the noise.
  • Our preview includes analysis of price categories to watch, assessments of underlying inflation trends, outlooks for the French, German, Spanish, and Italian national inflation prints, and sell-side analyst previews.

PDF analysis here:

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MNI (LONDON) - EXECUTIVE SUMMARY

  • The Eurozone September flash inflation round might be the cycle’s first to move the needle between a 25bp rate cut and a hold at an upcoming ECB meeting.
  • Heightened concerns around the Eurozone growth outlook following weak September flash PMIs have seemingly lowered the bar to an October cut.
  • As such, a downward surprise in core – and especially services – inflation may be enough to tempt some Governing Council members into joining the dovish contingent that is already pushing for such a move behind the scenes.
  • Based on the analyst previews we have seen, headline inflation is expected to ease to 1.9% Y/Y in September. This would be the first time the annual HICP rate comes in below the ECB’s 2% target since June 2021.  
  • Core and services inflation are expected to remain steady at 2.8% Y/Y and 4.1% respectively. With temporary effects at play, this should put heightened focus on the ECB’s seasonally adjusted data, which will strip out at least some of the noise.
  • Our preview includes analysis of price categories to watch, assessments of underlying inflation trends, outlooks for the French, German, Spanish, and Italian national inflation prints, and sell-side analyst previews.

PDF analysis here:

Keep reading...Show less