The ECB’s Schnabel published a series of slides on the ECB website. She highlights sticky services inflation.
Services inflation remains sticky, keeping headline inflation elevatedPrice pressures in services sector are broad-based and globalMedium-term inflation projections often clustered around 2% target, but risks remainWage growth expected to slow, but real wage catch-up still incomplete in parts of eurozoneLabor market remains tight with high demand and persistent shortagesPass-through of higher wages to producer prices stronger in services sectorServices demand has been resilient but showing signs of weakeningMonetary policy transmission may be losing some effectivenessGeopolitical uncertainty and rise in trade restrictions pose risks to outlook
This doesn’t sound like someone who is in a rush to cut. The market sees about a 33% chance of a cut on October 17 but 37 bps are priced in for December.
This article was written by Adam Button at www.forexlive.com.
