The disinflationary process is well on trackManufacturing has continued to contractServices activity showed an uptick in August but latest data is more sluggishBusiness are increasing investment slowlyHousing investment continues to fallSavings rate is well above the pre-pandemic period (about 3 percentage points)Labor market remains resilientWe expect the economy to strengthen over timeExports should contribute to the recoveryWage pressures in the eurozone remain strongInflation is expected to rise in the coming months, in part due to energy base effectsInflation should then decline to target in 2025Risks to growth tilted to the downsideWe are not pre-commiting to a particular rate path
The euro is down on the day but that’s more of a result of a strong US dollar than anything in the ECB decision or this statement so far. The market is fully pricing in another 25 bps from the ECB in December.
This article was written by Adam Button at www.forexlive.com.
