Euro-Inflation Plunges

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Koushik Korampalli

October 6, 2024

Written by Koushik Korampalli

Est read: 0 minutes

Eurozone inflation data for September was announced on Tuesday
- CPI Inflation fell to 1.8% YoY
- Core inflation fell to 2.7% which is a slight drop from August’s 2.8%
  - Core inflation strips away volatile food and energy prices
- This is the first time inflation fell below the target of 2% in 3 years.
- The decline in inflation prices was driven by energy prices
  - They dropped by 6% in September
  - This was following a 3% cut in August
Markets expect that the ECB will cut rates to 3.25%
- The next ECB meeting is held on October 17^th
- Currently rates sit at 3.5%
- Expectations for nearly 2% of interest rate cuts by 2025 end
- The main interest (deposit facility) have been cut from 4% to 3.5% in 2 rate cuts June and September
Services inflation is still relatively high at 4%
- This is a marginal drop from 4.1%
- This indicator makes some believe that a rate cut this month may not be a guarantee
The ECB expects inflation to bounce back at the end of this year
- However, the president of the ECB, Lagarde, stated her confidence in inflation sticking to the 2% target