Heads up: Eurozone inflation figures for August due later today
Let's get right into it. Headline annual inflation is expected to move up to 3.3% (previously 2.9%) while core annual inflation is expected at 2.5% (previouly 2.5%). As always, the read on core prices is still the most important here. And while not expected to push up, it hasn't exactly come back down to 2% either.
The bigger picture concern is that the more headline prices continue to be pushed up, be it due to higher energy prices and what not, there will eventually be spillovers to broader categories i.e. food and services.
So, it doesn't mean that core prices keeping steadier is a "good sign". The report needs to be taken as a whole alongside the latest developments that are impacting price pressures globally.
In that sense, the US-Iran conflict continuing as it is will not help the inflation outlook. That as energy prices continue to hold higher and shipping disruptions continue to bite at supply chains and the cost of raw materials.
Given that consideration, the ECB knows very well that they have to position against the potential risks of inflation pressures getting worse. And the fear is that there might even be second-round effects that show up down the road.
That makes a rate hike for this month very much a given now, especially after recent communique from the central bank. Traders are already pricing in ~98% odds of such a move in September, with another 25 bps rate hike primed for February now.
As mentioned before, a rate hike in September will just push monetary policy setting to mildly restrictive territory for the ECB. That is not enough if there is going to be a much bigger fight against inflation. So, this is very much just the first step by policymakers to put themselves back in the arena.
This article was written by Justin Low at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
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