Eurozone Inflation Decreases: Positive Signs for the German Economy
The positive signs from Germany have been confirmed for the entire Eurozone. Inflation is decreasing, with consumer prices in June rising only by 0.25 percent, as reported by the European statistics office Eurostat. This brings the inflation rate closer to the target value of 2.0 percent, considered ideal by the European Central Bank (ECB) for ensuring both growth and price stability. In May, the rate was at 2.6 percent, following 2.4 percent in April. This trend could raise expectations that the ECB will cut interest rates more frequently and forcefully this year than what is currently priced into the stock, bond, and currency markets. The ECB had raised interest rates ten times in a row until September 2023, following a record high inflation of more than ten percent in the fall of 2022. In June, the ECB already cut interest rates for the first time. However, ECB President Christine Lagarde indirectly dismissed speculations about a further interest rate cut in July at a central bank conference in Sintra, Portugal, where she referred to the strong labor market.
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