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2025-08-01 17:05:32
Eurozone inflation remains flat at 2.0%, with the ECB taking a cautious stance, but risks from trade wars and Chinese dumping remain. ⑴ Eurozone inflation stabilized at the ECB's 2% target in July, Beijing time, on Friday (August 1st). ⑵ This confirms the bank's dovish outlook on prices and supports its stance of keeping interest rates unchanged after a significant rate cut. ⑶ Headline inflation remained at 2.0%, with core inflation also stable at 2.3%. ⑷ Although service sector price growth slowed slightly, this was offset by a rebound in goods inflation. ⑸ ING economist Carsten Brzeski stated that recent trade developments and a weaker euro have reduced pressure on the ECB to further cut interest rates to support growth. ⑹ Combined with weak but positive GDP growth in the second quarter, the bar for another rate cut this year has clearly risen. ⑺ Financial markets are pricing in a less than 50% chance of another rate cut this year, suggesting that the bar for policy easing has risen since the tentative trade agreement between the EU and the US was reached. ⑻ Although tariffs will drag down growth and reduce price pressures, the market has already priced in most of the impact. ⑼ Some within the ECB are concerned that trade barriers could weigh on prices more than expected, leading to below-target inflation in the coming years. ⑽ Nomura Securities said that national-level data to date do not show signs of Chinese dumping.
