Eurozone Inflation Slows to 1.8%, Bolstering Bets on Faster Rate Cuts

Published On Oct 1, 2024, 8:18 AM

Inflation in the eurozone has fallen below the European Central Bank's target for the first time in more than three years, leading investors to anticipate quicker interest rate cuts. Average consumer prices rose by 1.8% in September, down from 2.2% in August, indicating a possible two-way shift in monetary policy as the economy struggles. Analysts predict a high likelihood (over 90%) of a rate cut at the ECB's upcoming meeting, with some expecting a quarter-point decrease due to the easing inflation reports, despite concerns about persistent inflation in certain sectors.

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Stock Forecasts

VGKView VGK chart on TradingView

Positive

With the anticipated lower interest rates in the eurozone, European stocks could experience positive momentum as borrowing costs decrease, potentially boosting consumer spending and corporate investment.

FXEView FXE chart on TradingView

Negative

Conversely, if the ECB delays rate cuts longer than expected, it may lead to depreciation in the euro, negatively impacting export-driven companies.

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