Euro zone inflation eased last month far more than expected, further curbing pressure on the European Central Bank to raise interest rates again this month to offset quick price growth.<\/p>\n
Overall inflation in the 21 nations sharing the euro currency slowed to 2.8% in June from 3.2% in May, coming well below expectations for 3%, as food, energy and services inflation all slowed.<\/p>\n
A more closely watched figure on underlying prices, which filters out volatile food and fuel prices, meanwhile slowed to 2.4% from 2.6% as services inflation dropped to 3.2% from 3.5%.<\/p>\n
Although the June reading is still well above the ECB’s 2% target, the recent decline in oil prices on bets for a peace deal has raised hopes that price pressures would ease from this point and the broader damage from the energy price surge would remain limited.<\/p>\n
Indeed, a host of policymakers, speaking on and off the record, have said that there is no rush for the bank to follow up June’s quarter-point rate hike with another move this month and policymakers could afford some time to see how price pressures evolve.<\/p>\n
The ECB is especially worried that the initial energy shock will start pulling up the price of other goods and services, eventually lifting wages as well.<\/p>\n
But such second-round price effects have yet to materialise and wage pressures are also not accelerating, boosting the case for patience.<\/p>\n
Still, the vast majority of economists and investors think that the ECB is likely to raise rates again in September or October, even if there is a pause in July.<\/p>\n
This is because energy prices still remain far above pre-war levels and the Middle East conflict could take yet another unexpected turn, like many times before, keeping price expectations volatile.<\/p>\n
There are also worries that the shortage of fertiliser from the Middle East and a European heatwave could reduce crop yields and put some upward pressure on food prices, lifting inflation just as energy costs are easing.<\/p>\n
The ECB next decides policy on July 23.<\/p>\n","protected":false},"excerpt":{"rendered":"Euro zone inflation eased last month far more than expected, further curbing pressure on the European Central Bank…\n","protected":false},"author":2,"featured_media":468056,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[72,113,61,60],"class_list":["post-527601","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-ie","tag-ireland"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/527601","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=527601"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/527601\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/468056"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=527601"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=527601"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=527601"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}